Sub-Prime Mortgage Loans - Who Qualifies For A Sub-Prime Loan?
Written by: Carrie Reeder
Sub-prime mortgage loans are designed for those who don't
qualify for "A" rated loans, typically those with a FICO score
of less than 650. They also cater to those desiring
unconventional terms, like a jumbo loan. As with any lender, to
find the best financing, you have to compare mortgage loan
Who Qualifies For Sub-Prime Loans?
Anyone can qualify for a sub-prime loan, no matter their credit
history. Even people with excellent credit may choose to work
with a sub-prime lender to work out special terms.
When it comes to mortgage loans, sub-prime lenders don't decline
applications. Rather, they present terms, which you can choose
to accept or decline.
For instance, a person could discharged a bankruptcy and apply
for a mortgage the next day with a sub-prime lender. The lender
would likely charge 12% above conventional rates and require a
50% down payment. The option is to either take the loan or wait
two years for much better terms.
What Sub-Prime Lenders Offer?
Besides flexibility with terms, sub-prime lenders offer near
conventional rates. On average, sub-prime lenders charge 1% to
2% above conventional rates for every drop in credit grade.
However, large cash reserves or down payments can offset a
negative credit history.
Sub prime lenders don't require private mortgage insurance - a
real savings if you don't plan on a down payment of 20% or more.
Lenders also offer refinancing options in your mortgage, saving
on closing costs in the future.
Who Provides Sub-Prime Loans?
It used to be that only unconventional financing lenders offered
mortgages to those with poor credit. But now virtually all banks
and financing companies deal with sub-prime loans. For the
lowest credit ranks, you still need to work with a sub-prime
To find the right sub-prime loan, compare financing offers from
several companies. You can work with a mortgage broker online to
evaluate quotes in minutes or go directly to lender sites.
When requesting a loan estimate, provide as much information as
possible, including your credit score. But don't let the
potential lender inspect your credit report unless you want to
see your credit score go down. Only allow the most promising
lead access your report to complete the loan application.
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When you are ready to build your first home or that dream home
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How to Qualify for a Home Mortgage Loan
Are you considering applying for a mortgage loan to purchase
your first home? If so, you should read the following tips below
that will make the process easier!
If You Have a Good Credit History It Is Easier To Qualify For