Perfect credit score desired for mortgage
Through the years, banks continue to become stricter when it comes to lending processes and options.
And while this is a well known fact, there are some instances where even borrowers with good credit
profiles have had to face being denied.
According to recent reports, loan procedures completed by banks and mortgage lenders were granted
to borrowers having a credit score of 750; this is a ten point jump from previous lending statistics
showing the stricter and near perfect credit score requirements that lenders now demand. This has an
average loan-to-value ratio of 76% while average refused loans had a score of 699 and a loan to ratio
value of 83%.
Today many mortgages are supported by federal agencies such as the Federal Housing Administration or
through big mortgage-finance names Fannie Mae and Freddie Mac; while lenders still entrust FHA-
backed loans scores of 620 and down payments of 3.5%, which is low. An average borrower going
through Fannie and Freddie for refinancing has a credit grade of 770, which is extremely high. While the
highest score is 850, many borrowers do not have a score above 800. However, the current average
score to refinance mortgage through Fannie and Freddie is now at 720, which was earlier considered
Conforming loans accepted for purchasing new homes has an average credit grade of 764 and down
payment of 22%. But now the applications that were denied have a 732 score and down payment of
19%. This depicts tightening credit standards of the banks that have created complexities for the
Borrowers with bad credit report have to pay more and are aware with this fact. But things are good for
those who have less than perfect grades, given theexorbitant fees they have to pay, they only have to
pay a down payment of less than 25%. So if you wish to have to better rates thenyou must have really
high credit score. Your 740 credit score is good but may not get the lowest rates.
Honesty towards credit and its product is best policy
We all know that not just good but perfect scores are desirable for living life in the most ideal way.
Hence, improvingyour credit report will not only improve your reputation and thus translate to lenders
also considering you reliable. You need realize that bad scores will prove to be detrimental in time of
need as this could mean that you have to pay higher interest.