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Subprime Mortgage Lenders - Helpful Tips When Getting A Subprime Mortgage
Loan
By: Carrie Reeder
If you have bad credit history, no down payment or difficult to prove income and
are looking to get approved for a home mortgage loan, you will probably need to
look at subprime mortgage lenders to help you. To see a list of our recommended
subprime mortgage lenders you can click on the link below.
There are a few things to know about subprime mortgages lenders. They specialize
in providing mortgage loans for people with less than ideal situations, whether
it be difficult to prove income, low or poor credit scores (most often the case
with subprime mortgages), or no down payment (this factor alone will not
necessarily put you in the subprime loan category).
The interest rate on a subprime mortgage loans will be higher than any other
type of mortgage loan where credit, income and down payment are all optimal.
However, with subprime mortgage loans, as a borrower, you need to be careful
about a few things when dealing with subprime mortgage lenders.
The interest rate with subprime mortgages can vary greatly. There are some
subprime mortgage lenders that, for the same set of qualifications, can offer an
interest rate of say, 7%, which is a little above average, and then there will
be others who will quote 9-12% or more. Now, if this is all for the same
qualifications, you could be talking about hundreds of dollars a month extra in
payments just because you are not getting a fair interest rate for your
qualification. This is where the borrower needs to be careful. Make sure you are
getting the best interest rate possible with your subprime lender. Some subprime
lenders take advantage of borrowers with bad credit or hard to approve
situations, and they charge much more in interest than what is fair for to the
borrower.
Another way subprime mortgage lenders can take advantage of unsuspecting
borrowers is by the lender having a pre-payment penalty on the loan that is
unreasonable and not fair to the borrower, based on their qualifications. A
typical subprime mortgage loan will have a 6 month to a 2 year pre-payment
penalty. However, sometimes a subprime lender will offer a loan with a 3 year or
higher pre-payment penalty. That is too high, I think a 2 year pre-payment
penalty is high, but any higher than that, and you should probably keep looking
for a new lender.
Other than a couple of things to be careful of when dealing with subprime
lenders, getting approved, even with a slightly higher interest rate, can be a
really great thing for you to buy the home you want.
About the Author:
To see a list of recommended subprime mortgage companies online, visit this
page: www.abcloanguide.com/lessthanperfectcredit.shtml. Carrie Reeder is the
owner of ABC Loan Guide, an informational website with articles and more about
various types of loans. |