EL PASO, Texas (KVIA) - Financial experts say housing fees will increase for certain borrowers with a credit score above 680.
These changes are part of a Biden Administration rule which was intended to provide equitable access to people looking to buy a home. Experts say first-time homebuyers with high credit scores are going to pay more under the new rule.
Before May 1, for example, those with a credit score of 740 or higher, would pay a fee of 0.25% on a $500,000 loan, or about $1,250. Some homeowners buying after that date, could pay as much as 0.38% or $1,875.
Homebuyers with lower credit scores will end up paying a lower rate.
"While you are trying to give people with lower credit scores an opportunity, maybe that they've never had before, it also affects people who have been working on building their credit scores their entire lives," said El Pasoan Jose Costemalle. "I don't think it is fair," said one homebuyer."
The new rule will affect mostly those who are securing loans through Fannie Mae and Freddie Mac. Many feel having a good credit score will not help them when it is time to apply for a home loan.
Tom Fullerton, UTEP Professor of Economics, says "the impression is that now let's see the advantages of a higher credit score and a 20% down payment have been eroded."
Critics of the new guidelines appear to subsidize homeowners with lower credit scores, but other say this is just not true.
"People with lower credit scores will not pay less than people with higher credit scores, that's just the way it is," said Rick Snow, President, Greater El Paso Association of Realtors.
Snow adds that while not everyone has the ability to purchase a home, everyone should have the right and backing to do so.
UTEP Professor Fullerton says, "this does not hurt, the households that have larger down payments and higher credit scores is simply, let's see, provides a little bit of upfront relief to those household who don 't enjoy those advantages."
The best advice is to speak with a realtor and find out if you can afford a home and how much of a home you can purchase.
New homeowners should also work on getting and maintaining a solid credit score and saving a 20% down payment.