Aug 01 2008
Mortgage Loans Online: What Are Sub-Prime Mortgage Loans
If you are an individual with a poor credit rating, you probably have heard about sub-prime mortgages and bad credit lenders. Sub-prime lenders are mortgage lenders that specialize in lending to individuals that do not qualify for traditional mortgage loans. If you are in a situation where you dont think you can qualify for a mortgage, sub-prime lending can help get you into the home of your dreams. Heres what you need to know about qualifying for a bad credit mortgage without losing your shirt.
Mortgage lenders consider individuals with poor credit to be high risk borrowers. Depending on the severity of your credit problems, many traditional mortgage lenders will not grant you a mortgage loan. Additionally, if the loan-to-value ratio of your home does not meet the lenders requirements they will not approve your loan. Homebuyers in either situation need to seek financing from mortgage lenders that specialize in sub-prime loans.
Bad credit mortgages are different from traditional mortgages in several ways. Sub-prime mortgages typically come with higher interest rates than traditional mortgage loans. The additional risk shouldered by the lender is passed on to the borrower in the form of higher interest rates. In addition to the higher interest rate the lender may require you to pay a higher number of discount and origination points as a condition of qualifying for the loan. Discount points are prepaid interest due at closing and origination points are lenders fees charged for processing your application. Many sub-prime lenders also include prepayment penalties in their loan contracts. If your loan contract includes this penalty and you refinance or sell your home before the penalty expires, you could be required to pay a hefty fee.
If you are in the process of shopping for a bad credit mortgage you need to be very careful when screening loan terms and fees. There are a number of lenders that take advantage of homeowners with poor credit; if you fall into a situation with a predatory mortgage lender you could lose your home. To learn more about your bad credit mortgage options, including common pitfalls to avoid by registering for a free mortgage guidebook.
To get your free mortgage guidebook visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.
Claim your free guidebook today at: http://www.refiadvisor.com
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