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Mortgage Rates for Qualified Borrowers Only



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By : Cassiano Travareli    99 or more times read
With the government taking over Fannie Mae and Freddie Mac, the rate for 30-year fixed mortgages dropped to 5.79 percent from 6.26 percent. Such low rate may spurn borrowers to buy real estate properties. Unfortunately, they will need to make a 20 percent down payment aside from a 740 or more credit score.

Before, a borrower with a 640 credit score can already enjoy the lowest mortgage rates available in the market. Such high qualifications come in the wake of the foreclosure crisis, where many mortgage lenders and servicers practiced aggressive lending practices. These practices were considered to be one of the reasons why millions of homeowners today are having trouble with their mortgage payments.

Learning from their mistakes, lenders have decided to tighten their underwriting guidelines and raise the credit score qualification in order to weed out the bad borrower from the good ones.

The government’s takeover of Fannie Mae and Freddie Mac has made it possible for many lenders to continue providing home loans. But because of what happened in the subprime industry, the lenders are now being extra careful. This means, that although credit is available, it can only be availed by qualified borrowers.

In the United States, the credit score is considered to be the basis of establishing a borrower’s credibility. Having a high credit score means that you are low risk and most banks will offer you low interest rates. On the other hand, a low credit score will make you unattractive to these banks and in order to manage the risks involved in lending you money, you will have to accept the high interest rate.

For consumers looking to enjoy good mortgage rates, you should make sure that your credit score is enough to meet such qualifications. If not, you will have to accept the relatively higher mortgage rates.
Cassiano Travareli has been educated in the finer points of the foreclosures market over 5 years.

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