Subprime Mortgage Lenders - Helpful Tips When Getting A Subprime Mortgage LoanWritten 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 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 case with subprime mortgages), or no down payment (this factor alone will not necessarily put you in 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 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 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 borrower needs to be careful. Make sure you are getting 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 borrower.
Bad Credit Mortgage Loans – How To Get ApprovedWritten by Carrie Reeder
Persistence is key working toward getting approved for a bad credit mortgage loan. There are many factors that you, as a borrower have control over that can help you get approved faster and easier. There are guidelines that most sub-prime lenders go by that, if you know them, can help you move through process without getting stuck, unable to get financing.
If you have a bankruptcy or foreclosure, even if they are recent, do not despair. Many sub-prime or bad credit mortgage lenders have what’s called, guidelines for bankruptcy or foreclosure seasoning. That means that they have a set amount of time that must go by from time of a bankruptcy or foreclosure before they will lend to a borrower. Usually this time is 2-3 years, but many sub-prime lenders have no seasoning time, which means, if your credit score is above a certain point, you could get approved day after your bankruptcy discharge. Other sub-prime lenders have bankruptcy or foreclosure seasoning of 6 months or a year. The biggest factor here will be your credit score.
Sub-prime or bad credit mortgage lenders will look closely at your credit score. In order to get 100% financing with bad credit, lenders will usually need to see you have a credit score of at least 600 or higher. There are quite a few things you can do to raise your credit score to be above this 600 mark. Here are a few suggestions:
1. Check your credit report for inaccuracies. Make sure all accounts included in bankruptcies and foreclosures are reporting accurately. If they show up as an open collection or unpaid account, charge-off or something else, this could be unnecessarily hurting your credit score. It will look like another, separate credit blemish instead of just one. Make sure bankruptcies and foreclosures are reporting accurately. Make sure accounts that are paid off, show up as being paid off, or accounts that are closed, show up as being closed.
2. Pay-off any small collection accounts or past due accounts that you can. Every account that you pay off will help boost your score. Once you have done this, get a letter of notification that account is paid off and talk to your lender. Most lenders have programs where they can, for a $75 fee per item, provide proof to credit bureaus that an account has been paid off and have your credit and credit score appropriately adjusted within a day or two. This program is sometimes called a “wrap it up” service. If you are in a hurry to get financed, this may be worth it to you.