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FICO score requirement going up for prime mortgage loans

By
Real Estate Agent with Southland Realtors

Traditionally, the credit score of 620 is where prime mortgage rates end, and sub prime rates begin. While this can vary from bank to bank, that's kind of the rule of thumb. It looks like with what's happening in the current credit crunch, that dividing line has gone (or is going) to about 680. 

From a Realtors point of view, this makes getting a buyer preapproved more important than ever. From an investor's point of view, this tight market will probably make or break a lot of good deals out there. As a matter of fact, some lenders are shying away from making loans on second homes, investment properties, commercial loans, even borrowers who have decent credit. Some loans that were preapproved are now being rescinded before the loan happens.

All this makes for a very slippery playing field in the real estate market today. At some point in the future, lenders will come out of their cave and decide to do business with the real world again. But for now, financing has to be at the front of the process before buying anything right now. As I have mentioned before, the silver lining to this is there will be a sizable number of foreclosure properties to choose from, if you can just get them financed. If anyone has any recent financing horror stories to tell, please share with us.