Sub-Prime Mortgage Loans Who Qualifies For A Sub-Prime Loan
Below is a MRR and PLR article in category Finance -> subcategory Mortgage.
Sub-Prime Mortgage Loans: Who Qualifies and What You Need to Know
Summary
Sub-prime mortgage loans cater to individuals who don't qualify for prime loans, typically those with a FICO score below 650, or those seeking unique terms, such as jumbo loans. To secure the best financing, it’s essential to compare mortgage loan offers.
Who Qualifies for Sub-Prime Loans?
Sub-prime loans are accessible to anyone, regardless of credit history. Even individuals with excellent credit might opt for a sub-prime lender to negotiate special terms.
Sub-prime lenders don’t outright reject applications. Instead, they propose terms you can accept or decline.
For example, someone with a recently discharged bankruptcy might apply for a mortgage with a sub-prime lender. The lender might charge higher rates and require a significant down payment. The borrower then decides whether to accept these terms or wait for better options.
What Do Sub-Prime Lenders Offer?
Sub-prime lenders provide flexible terms and nearly conventional rates. Typically, they charge 1% to 2% above conventional rates for each decrease in credit grade. However, having substantial cash reserves or a large down payment can help offset a poor credit history.
Additionally, sub-prime lenders don’t require private mortgage insurance, offering savings if your down payment is less than 20%. They also offer refinancing options, which can reduce future closing costs.
Who Provides Sub-Prime Loans?
Previously, only specialized lenders offered mortgages to those with poor credit. Today, nearly all banks and financing companies deal with sub-prime loans. However, for lower credit scores, working with a sub-prime lender is still advisable.
To find the best sub-prime loan, compare offers from several companies. You can use an online mortgage broker to quickly evaluate quotes or visit lender websites directly.
When requesting a loan estimate, provide detailed information, including your credit score. Avoid letting potential lenders check your credit report unless you’re seriously considering their offer, as it may affect your score. Only the most promising options should access your report to finalize the loan application.
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