What You Usually Need To Get Approved For a Prime Interest Rate Mortgage?
Obtaining approval for a mortgage loan with an interest rate of Prime is actually not difficult. In today’s economy, bank interest rates are at an all-time low, and those applicants with who meet the criteria for the best possible programs are actually getting rates well below Prime. Currently, the Prime interest rate is 8.25%, yet the average mortgage interest rate for A+ qualifiers is just over 6.0%.
Most lenders have similar criteria for determining an applicant’s status, and then the interest rate that will accompany such loans. By knowing exactly what lenders want to see in their customers, a potential borrower will be in a better position to evaluate his likelihood of approval, as well as gauge his likely interest rate.
Top Tier Criteria
Mortgage lenders usually consider applicants with mean credit scores above 620 to be in their top tiers, often called “A Paper” customers. This refers to the terms and rates these customers get on their loans, which are much lower than rates for customers with scores below this threshold. Although credit is not the only determining factor for interest rates, it is perhaps the most powerful and influential.
Additionally, customers with longstanding employment history at the same company are more likely to obtain Top Tier rates because lenders perceive such consistency as comfortable, and therefore feel that the borrower will be in a better position to predict his ability to pay a monthly loan invoice. Although each lender handles employment length slightly differently, it is generally agreed that 2 years with the same company is considered acceptable and appropriate. Applicants who have worked with their present employer less than 2 years may not receive the same rates.
Another aspect of an applicant’s profile that will determine whether or not he obtains the best possible interest rates is the amount of supporting documentation that he can provide to the lender. Those applicants who choose to proceed “Full Doc” will be required to provide proof of income, assets, employment history, etc. If all of these supporting documents are given to the lender in a timely fashion, and all of them are accurate and current, there is a better chance of lower interest rates. Some applicants are unable or unwilling to provide such proof of their situations, and they proceed with a Stated application, meaning that they simply tell the lender their income and assets without providing proof. Since this presents another potential risk for the mortgage company, these borrowers will not receive the best possible rates.
