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Short Summary
Main recommendation: To get a cheaper mortgage under the new loan-level price adjustment (LLPA) structure, work with a broker who can improve your credit file (rescoring), choose the loan product best suited to your situation, and keep your credit and payment history clean, rather than deliberately lowering your credit score. The speaker says the new rules narrow the pricing gap between high- and low-credit borrowers but do not reverse it, so high credit still gets you a better price.
Key Points
- An LLPA is an adjustment to Fannie Mae's base loan pricing based on your credit score, down payment, debt-to-income ratio, and loan product; weaker profiles pay more in closing costs or interest rate.
- The recent change narrowed the gap between top-tier and low-tier borrowers by reducing the benefit high scores receive (a 1.75-point adjustment is cited for the 720–740+ bracket), but high-credit borrowers still pay less than low-credit ones.
- The speaker estimates a roughly 2 to 2.5 point difference, or about $10,000–$12,000 on a $500,000 loan, between a 640-score, low-down-payment borrower and a high-score borrower.
- Pricing changes were reportedly built into lender pricing back in January, before public announcement, so a rate lock taken early may have saved borrowers a point or more.
- Choosing a different product can matter: for example, a 3.5% FHA loan may be more competitive than 5% conventional, depending on mortgage insurance differences.
Details Worth Noting
- Concrete instructions:
- Keep all existing debts and liabilities current; the speaker says no late payments and good standing on liabilities will get you a better loan.
- Make the largest down payment you can, since a higher down payment generally yields a better rate.
- Ask your loan officer whether a different loan product (e.g., FHA vs. conventional) is cheaper for your file.
- Request a credit rescore through a mortgage officer who knows how to do it; the speaker cites a client who went from a 650 to a 720 score and likely saved $5,000–$10,000 in closing costs.
- Consider working with a broker who can shop across lenders and build a longer-term financing plan, rather than only offering one lender's products.
- Ask about rate locks early if you expect rate or pricing changes, since lenders may already be pricing them in.
- The speaker warns against intentionally harming credit to get a better deal; he says the advice circulating online is misleading.
- The speaker cites a 620–640 credit range as the lower bracket receiving the 1.75 adjustment, but notes this is his summary of the reported change, not personalized advice.
Bottom Line
The new LLPA changes narrow the price gap between borrowers but do not make low credit cheaper than high credit; a strong credit file, a suitable loan product, and early rate-lock decisions are still the most effective ways to lower your mortgage cost.
