You may have seen a billboard or commercial on TV that said mortgage interest rates were very low. If your credit is good, you may be a good candidate for these loan programmes. On the other hand, getting a prime loan rate is not easy if your credit score is low. In this case, the best choice is a subprime loan.
Subprime vs. Prime Mortgage Loans
People who know about home loans likely know about two loan programmes. Most of the time, people with good credit can get prime loan rates. Prime rates are also available to people who have cash for a down payment and closing costs. If your situation for buying a home is a little different, you might be able to get a subprime loan.
What are subprime home loans?
People with low credit scores are most likely to get subprime mortgage loans. These people don't meet the requirements for traditional loans. Mortgage companies and other places that lend money have specific rules about how they lend money. The loan application is turned down if the person doesn't meet their requirements.
One of the best things about subprime loans is that you can get one even if you have bad credit. However, there is one big problem with them. Since many of the loans are given to people with bad credit, the chances of these loans not being paid back are high. Because of this, the interest rate on most subprime loans is higher. Rates depend on credit, of course. Applicants with good credit may get the same rates, while those with very bad credit can expect rates to go up by two or three points.
How to Pick a Lender for a Subprime Mortgage Loan?
Some lenders specialise in subprime loans. Also, a lot of regular mortgage companies have started to offer subprime loans. A mortgage broker is the best and fastest way to find a reputable subprime lender.
Everyone's life is different. Some people with bad credit have enough money for a down payment and closing, but some people with good credit don't have enough money for these costs. A mortgage broker can help you figure out which loan programme is best for you.
To get started, applicants must send in a quote request. You must include things like your income, credit score, the price of your home, etc. Lenders will bid for your business based on the information in your profile, and they will send you detailed quotes. So, before you choose a loan package, you can compare mortgage rates and terms.
