Sub-prime mortgage loans are designed for those who donít qualify for
ďAĒ rated loans, typically those with a FICO score of less than 650.
They also cater to those desiring unconventional terms, like a jumbo loan.
As with any lender, to find the best financing, you have to compare
mortgage loan offers.
Who Qualifies For Sub-Prime Loans?
Anyone can qualify for a sub-prime loan, no matter their credit
history. Even people with excellent credit may choose to work with a sub-prime
lender to work out special terms.
When it comes to mortgage loans, sub-prime lenders donít decline
applications. Rather, they present terms, which you can choose to accept or
For instance, a person could discharged a bankruptcy and apply for a
mortgage the next day with a sub-prime lender. The lender would likely
charge 12% above conventional rates and require a 50% down payment. The
option is to either take the loan or wait two years for much better
What Sub-Prime Lenders Offer?
Besides flexibility with terms, sub-prime lenders offer near
conventional rates. On average, sub-prime lenders charge 1% to 2% above
conventional rates for every drop in credit grade. However, large cash reserves
or down payments can offset a negative credit history.
Sub prime lenders donít require private mortgage insurance Ė a real
savings if you donít plan on a down payment of 20% or more. Lenders also
offer refinancing options in your mortgage, saving on closing costs in
Who Provides Sub-Prime Loans?
It used to be that only unconventional financing lenders offered
mortgages to those with poor credit. But now virtually all banks and
financing companies deal with sub-prime loans. For the lowest credit ranks, you
still need to work with a sub-prime lender.
To find the right sub-prime loan, compare financing offers from several
companies. You can work with a mortgage broker online to evaluate
quotes in minutes or go directly to lender sites.
When requesting a loan estimate, provide as much information as
possible, including your credit score. But donít let the potential lender
inspect your credit report unless you want to see your credit score go
down. Only allow the most promising lead access your report to complete the