Look for a prime lender who will give you the best rates and fees because of your high credit score. People with bad credit can get mortgage loans with reasonable rates from a sub prime lender. When making the terms and conditions of your loan contract, you will also have more freedom with a subprime loan.
When Prime Lenders Are Best
If you have a good credit score and a stable financial situation, you should look for a prime lender to get the best rates and fees on the market. If your payment history and cash on hand are almost perfect, you can count on getting great rates.
Do some comparison shopping online to find even better deals. You can save time on your search if you work with a mortgage broker. You can also pay points at closing to get your rate lowered even more.
But if you plan to put down less than 20%, you will have to pay for private mortgage insurance. The premiums cost around $1,000 or more per year. When your home's assessed equity value reaches 20%, you can stop paying for insurance.
Cases Where Non-Prime Lenders Can Help
Subprime lenders give loans to people with special situations, like bad credit or unusual terms. Subprime companies charge slightly higher rates because they are willing to accept mortgage applications from people who are a higher risk.
There are, of course, shady lenders who charge rates and fees that are too high. But you can avoid these companies if you compare home loans from different lenders.
Sub prime lenders don't require private mortgage insurance or a stellar credit past. Almost anyone can get financing; it just depends on how much you are willing to pay in interest and fees.
Where To Find Your Lender
Quotes and applications are almost always done online by lenders. Look at your credit report if you're not sure what kind of lender to go to. If you're still not sure, ask both types of lenders for loan quotes.
Even within each type of lender, loan costs vary a lot depending on the terms you choose. So, when comparing rates and fees, think about all the loans you could get.
