Home - Mortgage Loans | Personal Loans | Bad Debt Loans | Foreclosure Loans
Apply for a Loan | Best Auto Loans | Best Bad Credit Auto Loans | Best Bad Credit Loans | Best Bill Consolidation Loans | Best Cash Advance Loans | Best Credit Cards | Best Credit Repair Tips | Best Debt Consolidation Loans | Best Free Credit Reporting Tips | Best Home Equity Loans | Best Mortgage Loans | Best Pay Day Loans | Best Personal Loans | Best Products on the Internet | Best Unsecured Loans
Great Financial Advice
Apply for a Loan
Latest Financial News
Rate Lock Advisory
Best Products
Join Our Mailing List
Contact Us
Loan Articles Index
Auto Loans
Bad Credit Auto Loans
Bad Credit Loans
Bill Consolidation Loans
Cash Advance Loans
Credit Cards
Credit Repair Tips
Debt Consolidation Loans
Debt Reduction Loans
Foreclosure Loans
Free Credit Reporting Tips
High Risk Loans
Home Equity Loans
Home Loans
Lawsuit Loans
Mortgage Loans
Pay Day Loans
Personal Loans
Products on the Internet
Real Estate Services
UK loans
Unsecured Loans
Loan Article Index
Loan Articles A-G
Loan Articles H-Q
Loan Articles R-Z
Mortgage Calculators
Mortgage Calculator
Mortgage Amortization Calculator
Rent vs. Buy Calculator
How Much Can I Afford Calculator
Auto Payment Calculator
Click here to Sign up for Email and Newsletter

 

redhotloantips fat loss


Home Loans and Mortgages - Watch Out for Dangerous Subprime Loans

Written by: Charles Essmeier

With the growing interest in real estate purchasing and speculation, more and more lenders are offering "nontraditional" types of mortgages. These include adjustable rate mortgages (ARM) of every shape and size, the more popular interest-only mortgage, and the very dangerous Option ARM mortgage, which can cause the amount you owe to actually increase as time passes. One rapidly growing sector of the lending market is the so-called "subprime" market, which caters to consumers with poor credit records. The subprime market is a profitable one, as lenders offer loans to consumers whose poor payment history targets them as risky clients. Yes, they are risky clients, but the lenders charge fees and interest rates that are high enough to offset the additional risk. People who are interested in purchasing a home should be careful, however, as many people who should qualify for traditional loans are being pushed into higher-priced subprime loans instead.

The subprime market is quite a lucrative one for lenders, who are able to charge higher fees and interest rates due to the increased risk posed by clients with substandard credit histories. A subprime borrower might pay an interest rate that is several percentage points higher than that of a traditional loan, and the fees may include several additional "points" as administrative fees. A point is one percent of the loan amount. This can add several thousand dollars to the closing costs and tens of thousands of dollars to the cost of the loan over the life of the typical 30-year mortgage.

While it is understood that customers with poor credit histories represent a higher risk to the lender, potential borrowers need to make sure that they aren't classified as "subprime" by their prospective lenders. Studies show that up to 15% of subprime borrowers have credit scores that should have entitled them to loans at lower, more traditional interest rates. What this means for potential borrowers is that you should shop around for the best price on a loan and not accept it as fact when a lender tells you that you don't qualify for the traditional rates. The Federal Trade Commission is investigating several lenders who have increased their profits tremendously by steering borrowers who should have qualified for low-interest loans into higher-interest subprime loans, claiming that they didn't qualify for the lower rate.

How can you avoid such problems? Obtain a copy of your credit report. You can obtain one, with your credit score, from any of the three major credit bureaus - Experian, Equifax, or Trans Union. As a rule, lenders offer subprime rates to customers who have credit scores below 620. If your score is higher than that, you should be able to qualify for a better interest rate. If not, you can either accept the higher rates from lenders, or take time to improve your score by paying off some bills in a timely manner.

About the Author

©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to debt consolidation and credit counseling, and HomeEquityHelp.com, a site devoted to information regarding mortgages and home equity lending .


Other Related Articles:

Who is your Commercial Loan Broker
What can your commercial loan broker do for you? That all depends on which broker you choose to do business with. As is the case for most things in life, there is a variety of financial institutions to choose from. However, not all...read more

Home Mortgage Loan Refinance – Benefits To Refinancing Your House Online
Here are some of the benefits to doing your home loan refinance online: Everything seems to happen faster - Online, when looking for a mortgage loan you can search around, fill out an application and a few minutes later, you can be receiving a...read more

Illinois Mortgage Brokers Will Contact You to Give Different Mortgage Loans
Welcome to Illinoismortgagedepo - The premier consumer service on the web-connecting borrower to top Illinois mortgage brokers and Mortgage Lenders! Our Illinois mortgage brokers have high ethical standards and promise you the best Illinois...read more


Return to Home

468x60

Best Auto Loans, Best Bad Credit Auto Loans, Best Bad Credit Loans, Best Bill Consolidation Loans, Best Cash Advance Loans, Best Credit Cards, Best Credit Repair Tips, Best Debt Consolidation Loans, Best Debt Reduction Loans, Best Foreclosure Loans, Best Free Credit Reporting Tips, Best High Risk Loans, Best Home Equity Loans, Best Home Loans, Best Lawsuit Loans, Best Mortgage Loans, Best Pay Day Loans, Best Personal Loans, Best Products on the Internet, Best Real Estate Services, Best UK loans, Best Unsecured Loans
Subscribe to Mailing List | Private Policy | Unsubscribe | Site Map