Finance: Subprime mortgages: A growing option for customers with bad credi

Subprime mortgages: A growing option for customers with bad credi

Written by Syd Johnson

Subprime mortgage are home mortgage loans to consumer with poor credit histories. This category includes customers with late payments, foreclosures, bankruptcies and more on their credit applications. It also includes some first time buyers and people without a long credit file.

If you are new to repparttar country of for some other reason was shut out of financing for a while, you might not have enough information on your credit file about your spending habits, credit cards and more to warrant a regular mortgage application.

Subprime mortgages are designed to accommodate high risk clients. In repparttar 112115 real estate financing industry high risk always comes with high interest rates. It is not unusual for a subprime loan to carry rates that are three points or more above repparttar 112116 national average. In addition, repparttar 112117 loan amounts tend to be a bit smaller.

Home Equity Loan or a Home Equity Line of Credit?

Written by Syd Johnson

A home equity loan is good for items that require one large payment. This is why so many consumers use it for debt consolidation. The interest rates on home equity loans are low enough to be beat out repparttar

prevailing rates on almost every other type of consumer debt. In this era of teaser rates, it is safe to say that no one is safe when it comes to long term debt.

Financial institutions are constantly updating their rules to penalize customers based on their behavior even if they have great credit. One late payment or an over-the-limit fee can take you from a 3.9% interest rate to over 19%. It is no wonder that more consumers are willing to use a home equity loan to manage their finances. It is an easy, accessible, low cost option.

However, usually, once you get a home equity loan, you must pay off repparttar 112114 amount before you bank will consider you for another loan. It is easy to see why this would be repparttar 112115 case. A home equity loan decreases your available equity, increases your debt obligation to your lender, and is usually a sign that your monthly bills are getting beyond your control. Once you’ve been approved for your loan, it puts you in a less than ideal position as a potential borrower.

Home Equity Line of Credit is revolving so it can cover expenses over and over again.

A home equity line of credit functions as a revolving credit line that is always open in case you need fast access to some cash. It operates just like a credit card in repparttar 112116 sense that repparttar 112117 limit is finite, interest rate is applied only when you have an unpaid balance, and any amount you take out reduces repparttar 112118 total remaining balance.

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