The U.S. Government: Your Mortgage Rate “Middle Man”

The U.S. Government: Your Mortgage Rate “Middle Man”

Most folks don’t know or understand the markups on mortgage loan that are related to the risk of the loan as perceived by mortgage giants, Fannie Mae and Freddie Mac.  It is important to know these risk factors and what impact they can have on your mortgage.  Below is a nifty little chart that exemplifies the majority of Loan Level Price Adjustments.  It clearly illustrates where the government perceives the highest risks when it comes to mortgages.

The Government Is Marking Up Your Mortgage Rates

In a recent article I read, titled “Your mortgage rate is treated like auto insurance”, it talked about how conforming mortgages are subject to “risk-based pricing” called Loan-Level Pricing Adjustments.
LLPAs work similar to how auto insurance works.

An excerpt:

In the world of auto insurance, “riskier” car owners pay higher rates for insurance. The sports car pays more than the minivan; the street-parker pays more than the garage-parker; and the low deductible pays more than the high deductible. Instinctively, this makes sense.
The same concept applies in the world of mortgages. The more risk that you — as an individual — represent to Fannie Mae or Freddie Mac, the more you will pay for your mortgage.
Read the full article on the HSH website.

See How Much YOUR Loan Is Marked Up!

It is important to note that not all loans have markups or LLPAs. I can walk you through it by phone or email anytime.