Rates are low but fees are going up….

This article in the Chicago Tribune spells it out quite well.   As Fannie and Freddie face continuing losses, the fees that borrowers who don’t have a LARGE downpayment and absolutely excellent credit (not just good, but excellent) are finding that it’s more expensive to get the rates that they see quoted.

I was talking to one client who is contemplating upgrading to a larger home yesterday and he was shocked to realize that someone with a 710 credit score and a 20% down has to pay .25 pts to get “the best rate” available.

So, while it’s good to look at what rates are quoted, until you know what you are looking at in terms of loan to value, it’s hard to know what you’ll end up with.

Fees building up costs to obtain lowest mortgage rates — chicagotribune.com

New rules by Freddie Mac and Fannie Mae are raising fees for borrowers with less than perfect credit, those in the mortgage industry say. Other increased costs reflect the uncertainty in the mortgage market, as lenders try to reduce their risk and anticipate rates.

“While rates are low, lending standards are still really tight,” said Amy Bohutinsky, vice president of communications for Zillow.com, the home-value-calculation Web site. “What that means is that people who qualify for these really good rates … fall under a strict and narrow set of guidelines.”

Even borrowers with decent credit aren’t immune to higher fees and mortgage costs. In general, to get the low rates that make the headlines, borrowers often also are paying more points, or prepaid interest, to bring the mortgage rate down.