The main difference between the open and closed mortgages is whether your mortgage has the contract or not. It is either your mortgage “attached” to the agreement (commitment) or no.

Not to confuse with open or closed mortgages

Fixed rate – is the rate that stays the same during the whole term, no matter if the prime rate changes.

Variable (or adjustable) is the rate that fluctuates as the prime** rate changes.

**Prime rate – The interest rate that commercial banks charge their most credit-worthy customers. The prime interest rate, or prime lending rate, is largely determined by the federal funds rate, which is the overnight rate which banks lend to one another.

A-lenders – the banks who go with the smallest rates for mortgages and the insured mortgages go thru them. A-lenders accept people with high credit history. (What exact number is required depends on the bank’s guideline).

B-lenders – the banks that go with higher rate but mortgages – yes, no matter what credit history they have. Even if you have the bad credit history, they still provide the possibility to obtain the mortgage financing. It is usually temporary – for half a year or a year.

Banks have different programs that are attached to the credit scores. It also depends on each bank’s guidelines. Each guideline must show which score is accepted for each type of lending. Lenders check your credit report so they can instantly see how much debt you have, how reliable you are with bill payments, as well as information about bankruptcies within the last several years.

To maximize your credit score, you should NOT apply for any new credit cards or consumer loans or finance a car!

Lenders also look at this figure to decide how much money they will lend you, and how much interest they will charge you on the loan.

That’s why it’s best to wait until after you’ve bought your home to go shopping for furniture and appliances. There is also another reason to wait.

Once you’ve bought your home, you can get a loan for up to 100% of your home’s value to buy anything you want.

If you learn to play by the rules of the lenders’ game, you can get the best credit score possible and mortgage on the best terms.

Score = numbers only indicated in guidelines

History – history that shows the ability of the person to pay out his/her debts

Your credit history should contain not less than 2 trades, each of them more than 2 years and more that $2,000-2,500.

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