Greensboro, N.C. (WGHP) — Purchasing your first home can already be a confusing process. Now, some changes in conventional loans are causing more confusion for first-time home buyers.
If you have read about some changes that seem unfair to buyers with high credit, FOX8 found out if that is the case.
The message from Greensboro realtors and mortgage companies is to not panic, saying a higher credit score is still going to be better for you to purchase a home than a lower credit score, and people with higher scores are not being punished when it comes to prices.
“Do not go out and tank your credit score because you think you are going to get better terms on your mortgage. That is not what you should be doing,” said Scott Schubert, the branch manager at Benchmark Mortgage in Greensboro.
There are changes to conventional loans, but there are a lot of factors at play when determining your rate. So to say, a higher credit score equals a higher mortgage rate and a lower credit score equals a lower mortgage rate is not accurate.
“I feel like it looks one way, but there are a lot of things going on in the market that it might not be the case,” said Sofia Crisp, the Greensboro Regional Realtors Association president.
All of this is coming to light because of recent loan level price adjustments to Fannie Mae and Freddie Mac, the federally backed home mortgage companies.
“Today, if you have a higher credit score, you are still getting better terms than someone with a lower credit score. It is just that it is different than the way it was about three months ago. If you have a lower credit score today, and you are doing a conventional loan, your pricing is a little better than it was,” Schubert said.
Scott says the goal of the change at the federal level is to help first-time buyers, but the type of loan might be the real issue.
The Greensboro Regional Realtors Association says the big issue for first-time buyers is the price tag on homes. The average in Greensboro right now is about $260,000.
“The biggest challenge right now is finding property that they can afford,” Crisp said.
They want you to remember that even though your credit score plays a factor in what you will pay for your mortgage, it is not the whole story.
“A high credit score person today, in most cases gets, better terms than a low credit score person,” Shubert said.
Keep in mind that all of those loans with changes are just for conventional loans, which might not be the best fit for you.
The changes do not apply to other popular options including FHA, VA or USDA loans.