Is “change” always a good thing?

“Change” is the buzz word going around right now. As presidential candidates are vying for votes, they all want to be seen as the candidate that can bring change. Political affiliations aside, here is the latest on changes in the way lenders set rates for borrowers.

We are all aware that 2007 was not a great year for the subprime market, and has lead to many subprime (and prime) lenders changing their guidelines, ending loan programs, or even closing their doors. We have been reading about this for months now, but subprime woes caused lenders to re-evaluate other loan programs and guidelines too — including loans for people with average and above average credit!

For instance, two years ago borrowers with a credit score of 680+ received the exact same rate. It didn’t matter if your score was 680 or 800, the rate was the same. Now lenders are making changes to the way credit scores affect rates, and the days of everyone with 680+ credit scores getting the same rate are over.

Here are some example rates for someone buying a $200,000, owner-occupied home with a 20% down payment. Remember that rates change everyday, but this will provide an idea of what is happening.

– 720+ score rate is 5.375%
– 680 - 719 rate is 5.500%
– 660 - 679 rate is 5.625%
– 640 - 659 rate is 5.750%
– 620 - 639 rate is 5.875%
– less than 620 rate is 6.000%, and that assumes the lender will accept a conforming loan with a credit score under 620, which is not likely in this market.

“I will bring change, and it will better than theirs, promise!”

As all the presidential candidates put a positive spin on the change he/she will bring if elected, not all the changes proposed are beneficial for everyone. Changes in the subprime market were necessary, but recent changes for borrowers with average and above average credit is unfortunate. It seems we are all going to continue to feel the pinch from subprime foreclosures.

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.