The reality vs. perception. It is probably true, and will probably always be true that to get the best possible rate on a new 1st or 2nd mortgage for a new/used home purchase or refinance that having a 720 FICO middle score will get you the best possible interest rate and/or terms. The reality or truth is, however, that the wholesale and retail mortgage lenders and originators are constantly stumbling over themselves in an effort to become more competitive to the final decision maker, you the borrower. What does this mean in terms of FICO middle score that you might need for a good or great interest rate and terms? Well I am glade you asked. First, if you actually reviewed the wholesale rate sheets that are constantly faxed to mortgage brokers around the country, you would find that for some wholesale lenders (the lender actually making the loan through the broker to you) consider FICO mid scores all the way down to 620 as prime! Thats right: "The golden rule is that those with the gold make the rules." And in general you will find that 70% to 80% of the loan products in the prime range are rated for 680 Fico mid score. Thats it. The actual gain in terms or rate or whatever for a 700 or 720 mid score in many cases will be negligible. Food for thought for anyone considering playing the get a new mortgage game. Dog
Remember that we are dealing with 2 phases of the loan process-- the automatic (computer) desktop underwriting, and the review by an actual underwriter. I believe that the computer model may view all scores above x the same, but eventually loans go to a human underwriter, who,(IMPE in my personal experience) will notice and reward higher scores.
Yes I understand, but I am not sure what your point is? Could a 719 score be fudged to 720 in underwriting, could a 718,717,716,715? The answer is yes. Could underwriting make a mistake either way on any given day? The answer is Yes. Could a consumer be convinced that he or she is getting a really great % rate and deal on a loan, when really they are paying 2 extra points for nothing? The answer is Yes. Dog
My point is that while the auto underwriter may automatically approve all loans with a midpoint score of x or above, the human who reviews it may require fewer conditions for applicants with a higher score.
<<My point is that while the auto underwriter may automatically approve all loans with a midpoint score of x or above, the human who reviews it may require fewer conditions for applicants with a higher score.>> My POINT is that as long as and as much as lenders can and will keep borrowers in the dark about how or why mortgage scoring is used, Lenders can and will have the ability to increase fee income. Funny - credit scoring was sold as a tool to reduce and or remove underwriting costs and save consumers on loan fees. Go figure???? Dog
