Credit Scores and NJ Mortgage Lenders - How to Find a Great Mortgage

Credit scores largely affect our lives, and like it or not, it is this score that also determines whether NJ mortgage lenders will or will not lend you money to buy or improve your property. Some other aspects that your credit score affects are the size and lastly, the interest rate charged on your loan. For better understanding, let us put it this way – for NJ mortgage lenders, a person’s credit score is the most important factor that decides whether he or she qualifies for the loan or not. Now, with superior technology and stricter guidelines, credit scores into further categories or grades.

Credit Grades Used By NJ Mortgage Lenders

NJ mortgage lenders use seven credit grades to categorize their potential and existing borrowers. They consider ratings from three major credit bureaus and use the average score to categorize you in their system. Highlighted below are all seven grades that these NJ mortgage lenders make use of.

• Credit score – 720 or above
  • Borrowers with credit scores such as these are categorized under excellent borrowers, and they qualify for an A+ loan
  • Mortgage lenders offer such customers with any kind of loan they want, with the fastest closing times and also the best rate of interest
• Credit score – Between 680-720
  • A borrower with a credit score between 680 and 720 may also be considered for an A+ or equivalent loan
  • Borrowers who fall in this category also stand a good chance of availing attractive rates of interest on their loans, and can also close their loans at a relatively shorter time
  • If the NJ mortgage lender ensures that the loan falls within the appropriate guidelines laid down by the law, the closing process will be a smooth one
  • Unlike people with credit scores of 720 or above, people in this category may be required to submit some additional documents for loan approval
• Credit score – Between 660 and 680
  • This category can be considered as the border of A-
  • Mortgage lenders usually offer fewer choices for people in this category, and loans that are available come at premium rates
  • Cash-out refinancing on borrower’s side will most probably have some restrictions
  • Additional closing time may be required for such loans
  • Moreover, NJ mortgage lenders may also require explanation letters or additional documents for explanation of certain credit issues
• Credit score – Between 620 and 660
  • Credit scores that fall below 660 but are above 620 may force a lender to consider revising a borrower’s file to determine the risk
  • Supplemental letters of explanation and credit documentation is required before finalizing the underwriting decision
  • Though this FICO scoring range may enable a borrower to get an A pricing, the closing time that is required in such loans usually takes weeks, since a lot of documents have to produced
• Credit score – Between 580 and 620
  • Borrowers in this category come under B or C borrowers
  • Sub-prime mortgage lenders usually offer mortgage to such borrowers
  • Traditional underwriting takes place, and supplemental documentation is essential
  • Higher interest rates
  • Closing takes several weeks, and an origination fee is also required
• Credit score – Between 500 and 580
  • Borrowers in this category are not offered the best loan interest rates
  • Interest rates are considerably higher, the closing time is also longer and mortgage lenders do need additional documents

For credit scores below 500, borrowers may find it unable to obtain a mortgage. If lenders do loan money, the interest rate may not be any better than that offered by a credit card. It is strongly recommended that the borrower works on improving his or her credit rating.