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What Is A Prime Mortgage?

By Jim Micheals

Top definitions and ways to understand what a prime mortgage happens to be.

In order to answer the question of what is a prime mortgage, one has to look towards credit scores and the ability to pay back loans. What is a prime mortgage in today’s lending world? It is a mortgage loan that is handed out to a premium type of customer. The idea behind a prime mortgage is that it carries much less risk than a typical mortgage, since the person taking out the loan is quite likely to be able to pay back the loan on time and without any incident. This is a valuable thing for mortgage lenders, especially in today’s financial world where people are losing their homes to foreclosure.

What is a prime mortgage and how is it defined?

Typically, a prime mortgage can be defined as a lower rate mortgage that’s given to someone who is financially stable and has a credit score of over 700. These people are seen as the folks that lenders want to work with, so they are given the most agreeable rates and they are given the best loan terms, too. When one qualifies for a prime mortgage, they are able to save lots of money when compared to a sub-prime mortgage.

The other mortgage types

If you have been paying attention to the financial world, then you have heard talk of “sub-prime” mortgages. These are basically loans that were given out to people who were too risky. Lenders jacked up the rates and hoped to make money off of these loans, but they ended up getting burned in a big way when individuals failed to pay back their loans. The idea behind giving out more prime mortgages is that you are limiting your risk as a creditor, so it is a win-win situation for all involved.

Related posts:

1. How Does The Prime Rate Change Mortgage Rates?
2. How Does The Prime Rate Affect Mortgage Rates?
3. Does The Prime Rate Affect Mortgage Rates?
4. Does The Prime Rate Affect Mortgage Rates?
5. What Is A No-Cost Mortgage?