So what does "below prime" really mean? Is a rate that is below prime truly a great rate? What is a prime rate? Are prime rates fixed or adjustable. Read throughout the page to find the answer to these questions and more.Mortgage lenders do not base their rate by the prime rate. The Prime Rates is an interest rate for an unsecured business loan. Since mortgages are secured by the subject property, these loans are are usually less than prime.
Many times below prime loans are offered through local banks and credit unions and apply to HELOCS or home equity lines of credit. These types of loans have very strict qualifying guidelines and most borrowers will not qualify for the special below prime rate.
The prime rate is based on the federal funds rate that is set by the Federal Reserve. The prime rate is used as a benchmark for home equity lines of credit (HELOC) or credit card rates.
