Ever thought of refinancing your house and thinking to either apply for prime or subprime mortgage.

It all depends on your credit rating. If so what is considered a prime credit rating? Yes, it does primarily have to do with credit rating. Currently 640 is the extreme low on a prime and has several limits on rates, loan-to-value ratios, and programs.

A 680 is more consistent with a good prime score. An FHA loan does not look at the credit score as much and can be much lower as long as it meets the other criteria. FHA loans are available for refinance up to 95% of the property value.

One thing to watch out for is that subprime mortgages are also done with higher scores. Sometimes because people don’t want to pay private-mortgage insurance (PMI) so they will take a higher interest rate.

Right now the rate difference is really high and not worth the difference in payment. Most are also 2/28 loans which mean that they are fixed for 2 years and then adjust after 2 years either every 6 months or every year.

Some brokers will use these to make more money for themselves rather than what is best for the customer. Look for your best fixed rate loan. Make sure you are given all potential closing costs for the lender, broker, title company, recording of deed, etc.

President Bush may not have signed the bill yet, but there was a bill passed by Congress to make the PMI deductible on our taxes.


Tags: , , , , , , , ,