Title:
Bad Credit Home
Financing - Choosing A Subprime Mortgage Lender
Word Count:
583
Summary:
In the early
nineties subprime mortgages accounted for about five percent of all mortgages.
Today the subprime mortgage loan sector comprises more than twenty percent of
the mortgage market. With this explosion of subprime mortgage lenders and
brokers, it is important to know what to look for when choosing your lender.
Not only do you want to be sure that you are getting the best deal possible for
your subprime mortgage, you also want to know how to avoid falling prey to a
pr...
Keywords:
home mortgage,
bad credit, subprime lenders
Article Body:
In the early
nineties subprime mortgages accounted for about five percent of all mortgages.
Today the subprime mortgage loan sector comprises more than twenty percent of
the mortgage market. With this explosion of subprime mortgage lenders and
brokers, it is important to know what to look for when choosing your lender.
Not only do you want to be sure that you are getting the best deal possible for
your subprime mortgage, you also want to know how to avoid falling prey to a
predatory lender.
What makes a person a candidate for a subprime mortgage? Bad credit is the
predominant reason but there are others. Fluctuating income and even the type
of property being purchased can also necessitate an unconventional mortgage. If
your unique situation requires a subprime mortgage do the following when
choosing your loan agent or broker.
Know your credit history, particularly your FICO score. A score lower than 620
generally means that you will be offered a subprime mortgage. Do not take for
granted that you must seek a subprime mortgage. Ask what products are available
for you. Also, make sure you have your employment, income and payment histories
readily available.
Do not assume that getting the lowest interest rate also means you are getting
the best loan. Most subprime mortgage loans will be two percentage points
higher than a conventional loan and may have additional fees. All of the
prospective subprime mortgage lenders should submit their loan packages to you
in writing. Take the time to carefully analyze all of the mortgage offers.
Compare not just the interest rates but also the fees you are being charged.
Be wary of prepayment penalties. A subprime mortgage is a vehicle for repairing
your credit or responding to a specific applicant situation and usually is a
short term solution. Hefty prepayment penalties may lock you into a subprime
mortgage for a longer term than is necessary or cause you to pay a substantial
price for refinancing to a conventional mortgage at a later date. You may have
to accept some sort of prepayment penalty but negotiate with the various
lenders to guarantee you have the least burdensome penalty possible.
Even though you are looking for a subprime mortgage lender you still have many
options. After comparing the loan offers from the different lenders, negotiate
the terms. Do not feel that a lender is doing you a favor by offering you a
subprime mortgage. Many times the compensation a lender receives for a subprime
mortgage is greater than that which is received for a conventional
mortgage.
Most subprime mortgage lenders are honest and responsible business people.
Still, the regulation of subprime loans varies widely and you should be careful
not to fall victim to a predatory lender.
1. Don’t respond to telephone or direct mail offers from subprime mortgage
lenders. Do your own research. The Better Business Bureau, the telephone book and
the Internet are all good resources. Ask friends for referrals.
2. Don’t allow yourself to be pressured. Ask for offers in writing and use
plenty of time to compare them.
3. Don’t sign any documents that have blank spaces or incorrect dates.
4. Don’t be convinced to inflate your income or net worth.
5. Don’t skip reading any portion of your loan documents because your lender
tells you “that part isn’t important”.
Choosing a subprime mortgage lender is like any other purchase. The more
knowledge you have and the more research and analysis you do, the better your
decision will be.