Mortgages are usually priced in tiers according to mortgage size and credit rating. Mortgages in excess of the prevailing conventional conforming limit (jumbo mortgages) carry slightly higher interest rates. Applicants with A+ credit obviously get to take advantage of the lowest pricing tier. Applicants with less than optimum credit have to accept slightly higher rates because their loans carry a higher risk.
This being said, while applicants with less than stellar credit may have to accept a higher interest rate, this does not mean they have to pay discount points or accept premium pricing. Every pricing tier has a par rate. If you insist on getting par, therefore, there’s no legitimate reason it can’t be delivered.
Table 2 illustrates what might be available on a given day to the borrower with A- credit. Note that the par rate is a quarter percent higher than the A+ credit tier shown in Table 1, but a par price is still available. The lesson to be learned here is that even is you have less spectacular credit, you don’t have to pay discount fees or accept rebate (premium) pricing. Given the current state of mortgage availability, the spread between the A+ and A- par rate will undoubtedly be higher.
Note: As with Table 1, double click table to read.
