When you go to a company to get a home loan, they are considered the primary mortgage market. After closing your loan, they are usually sold to the secondary mortgage market, including Fannie Mae and Freddie Mac. When they put out new guidelines, everyone has to follow them, or they cannot sell their loan. Given that background for those of you who are new to the market, here are Mickey's words:
Historically, an approval by Fannie Mae or Freddie Mac's proprietary software meant that a borrower qualified for "good rates" regardless of his or her credit scores. The computer software considered the scores along with loan amount, income and employment history, and liquid assets. An approval obtained by the 640 credit score applicant was as marketable as an approval by a 740 credit score applicant.
This is no longer true. The agencies are changing their pricing models on loans delivered after March 1, 2008. A loan that closes in January might not make it to the agency until March so most banks are already adjusting their pricing. In the very near future, buyers are going to be priced depending upon their credit scores. Lower scored borrowers may be priced out of the Fannie/Freddie market even if they qualify for a Fannie/Freddie program. The answer, in many cases, will be FHA. There are no more subprime loans and Fannie/Freddie is making it harder on the marginal borrowers to obtain a "good" rate.
Bottom line: you need a credit score of 740 or higher for a good interest rate loan. If you have a few "dings" in your credit, contact me at http://www.audreybutlerhomes.com/ and I can connect you to someone who can provide guidance to help you.
