Prime Mortgage

Prime Mortgage

· A type of mortgage with a low risk of defaulting on the loan and are offered to borrowers with good credit records and a monthly income at least three to four times greater than their monthly housing expenses-mortgage payments plus taxes and other debt payments.
· It is a high-quality mortgage that meets the standards set by Fannie Mae and Freddie Mac and is eligible for purchase or securitization in the secondary mortgage market.
· Prime mortgages are less costly to borrowers and put banks at a lower risk of non-payment.
· Prime loans are much less likely to have a prepayment penalties.
· It is more difficult for home buyers to get approved for prime mortgages, especially if they have minimal income and/or a mediocre credit history.
· Borrowers with problematic credit records more frequently accept mortgages with terms that are not favorable to them, because they aren’t able to qualify for prime loans.
· Prime mortgage also referred as conventional mortgage . The conventional mortgage gets its name because it is the most common form of financing the purchase of a house and is “conventional”, i.e. not insured or guaranteed by the HUD, Veterans’ Administration or the Federal Housing Agency (FHA).
· A Prime mortgage usually does not go over the appraised worth or purchase price of the property by 75%, whichever is the least of the two. It is also the norm for a Prime mortgage to be a long term loan of thirty years since buying a home is considered a lifetime investment.