Yes – you read that right.
As of May 1, 2023, a new Federal law will go into effect that seems completely Backwards for homebuyers.
If you have a credit score of 680 and higher, and are able to put down 15-20% towards your down payment – you will now be forced to pay higher rates and higher fees in order to subsidize those buyers with riskier credit ratings.
In other words, good credit buyers will soon be forced to pay out of their pocket in order for bad credit buyers to get a lower rate and lower fees. This law effectively punishes the responsible and rewards the unaccountable.
Providing more “affordable housing options” to low income / bad credit buyers is great and should be applauded – BUT – putting the onus on the hard-working, good credit buyers is simply a Bad Idea, and will not go over well in this market.
The mortgage market is still in disarray and trying to get back on its feet since the rapid increase in interest rates of March, 2022. To implement this type of guideline one year later, and during Spring-time buying season – is a slap in the face to many would-be homebuyers who have worked tirelessly maintaining their credit scores, and saving what they could in order to realize the American Dream.
A similar approach was also taken in the early 2000’s, when the federal government enacted similar type laws in order for low income buyers to enter the market… and we all know how that turned out (The Great Recession of 2008). .
We have always been told to “secure a stable job, build your credit by paying on time, save your money for a down payment.” Not the case any longer… Buying a home is a Privilege, not a Right.
