Fannie Mae and Freddie Mac Implement New Risk-Based Pricing - So How's Your FICO?
Fannie Mae and Freddie Mac have announced that in order to compensate for the high delinquency credit losses on FNMA and Freddie MAC loans, certain loans that close after December 31, 2007, will be re-priced to reflect the new risk-based pricing. 
The loans that will be effected all have loan to values (LTVs) that are greater than 70%. Here's how it breaks down:
Credit Score Approximate Rate Increase
Below 620 or Non--Traditional Credit .625%
620-639 .500%
640-659 .375%
660-679 .250%
Now if your loan is conventional and not funded through either of these agencies, then this will not affect you. But if you had planned on going this route, be sure you know your credit score and are prepared to deal with any possible rate increases to your loan.
And remember...this will not go into effect until January 1, 2008, so if you know you would fall into one of these categories, try to lock in before the end of this year and save yourself some money.
If you would like to check out your credit (before your lender does), you can get your report from the three top credit reporting agencies - Experian, Trans Union and Equifax all for free (once a year). Just go to https://www.annualcreditreport.com/cra/index.jsp, fill in the information, and retrieve your free reports. The free reports do not include your credit score, but at least you can see how your credit is looking. You can get your score, but you will have to pay extra for it.
And just as a tidbit, earlier in the year a study was published regarding the percentage of mortgage delinquencies as compared to FICO (credit) scores. Here's how it broke down:
FICO Score % Delinquent
Up to 499 87%
500 - 549 71%
550 - 599 51%
600 - 649 31%
650 - 699 15%
700 - 749 5%
750 - 799 2%
As you can see, the numbers show that the higher your FICO your score, the less likely you will be delinquent on your mortgage. While that may not fit every case, it's how the game is played in mortgage lending. 
We'll definitely talk about credit scores more in another post.
As always, thanks for "hanging out" with us.
Chat with you tomorrow.