Understanding the Recent LLPA Changes 

For anyone who is in the market for a mortgage, Loan Level Price Adjustments (LLPA) can be a daunting term to hear. However, understanding what it means and how it affects your mortgage is crucial to making an informed decision when taking out a mortgage.

What are Loan Level Price Adjustments?

Loan Level Price Adjustments are fees charged by Fannie Mae and Freddie Mac to lenders for the risk they assume when buying a mortgage from the lender. These fees can vary based on factors such as credit scores and LTVs (Loan-to-Value Ratio).

New LLPA Rules

On May 1, 2023, new LLPA rules were implemented by Fannie Mae and Freddie Mac for all mortgages being affected. These new rules will impact both LTVs (Loan-to-Value Ratio) and credit scores, and it's important to understand how this will affect your loan. Download the LLPA Matrix here

The Good News About the LLPA Changes

Firstly, it's essential to know that the new rules only affect loans being delivered to Fannie and Freddie after May 1, not loan applications taken. This means that if you have already applied for a mortgage, you won't be affected by these new rules.

Additionally, the good news is that the price hits have already been factored into the pricing since April 4. So there is no big price increase coming May 1 because it's already been factored in. This means that anyone taking out a mortgage after May 1 won't see a significant price increase, as the adjustments have already been made.

How LLPA's Impact Your Mortgage

However, it's crucial to understand that LLPA will still have an impact on your

mortgage going forward. LTVs and credit scores are two essential factors that lenders consider when deciding on the interest rate you will receive on your mortgage. Higher LTVs and lower credit scores can result in higher interest rates, and therefore, higher monthly mortgage payments.

Therefore, it's essential to have a good understanding of your credit score and LTV ratio and how they affect your mortgage. In some cases, it may be worth improving your credit score or making a larger down payment to reduce your LTV ratio to get a better interest rate.

Get Informed

If you have any questions about LLPA or how it may affect your mortgage, give us a call at the office at 727-376-6900. We will be able to provide you with a detailed understanding of the new rules and how they will impact your loan going forward.

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