The 2 rules of prime mortgage rates

  • Know what prime is, and never borrow a lot of money at a prime rate for very long.

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The “prime” rate sounds cool, especially when offered to you. “You are such a good customer… Your credit is sooo good….” Yadda, yadda. Until the late 1980s, prime was cool, defined as “the rate offered by banks to their best corporate customers.” The prime rate offered by banks was the result of calculating their cost and availability of funds, and prime rates could vary from bank to bank.