Mortgage borrowers might be forgiven for sometimes feeling like victims of a bait-and-switch scheme.For the last year or so, news has been trumpeted about historically low interest rates on 30-year fixed-rate loans; the rates tilted near 4.5 percent late last year and are now hovering above 5 percent. But when a borrower calls a mortgage broker to secure such a rate, he or she often fails.That’s because many borrowers have a credit score below what is considered “prime,” according to Experian, one of the major credit-reporting agencies. On a scale of 501 to 990, Experian puts the average score at 771. (FICO, which developed the most widely used scores for assessing credit risk, doesn’t publish an average figure but says the median credit score is 720,
on a scale of 300 to 850.)And under current guidelines from Freddie Mac and Fannie Mae, the government agencies that set lending standards for most mortgages sold in the United States, only those borrowers with credit scores of 740 or more, and a down payment of at least 20 percent, can avoid extra loan charges that could effectively raise the mortgage rate.
By Bob Tedeschi, Jan. 14, 2010 NYT

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