Are you looking for a home loan with bad credit? Individuals living with bad credit know how difficult it is to obtain a home loan. Traditional mortgage lenders and banks consider you a high risk and may deny your loan application. However, it is not impossible to get a loan with bad or poor credit. Individuals who cannot receive traditional financing may be able to obtain a home loan with a sub prime mortgage lender.
What is a Sub Prime Mortgage Lender?
Sub prime mortgage lenders specialize in lending money to individuals with bad credit. For the most part, you can expect to pay a higher interest rate. These are high risk loans, and the odds of the property foreclosing are much higher. By charging a higher interest rate and additional fees, lenders are guaranteed a profit on the property. Nonetheless, sub prime lenders are willing to give mortgage loans because the funds are secured by the property. If the homeowner is unable to repay the loan, the lender simply forecloses on the property.
How to Choose a Sub Prime Lender?
Mortgage broker websites have online request forms. Submitting a request form is fast and convenient. Instead of requesting a quote from several different sub prime lending sites, submitting a request through a broker will provide you with multiple offers from various lenders. Brokers have access to a large database of prime and sub prime lenders. Based on the information provided on the online request form, brokers will negotiate the best rates and fees with multiple sub prime lenders. Within 24 hours of submitting a request, you will receive offers from lenders competing for your business.
Carefully compare rates and fees from at least three to four sub prime lenders. Once you have selected a reputable sub prime mortgage lender, submit an official application. The entire loan process varies according to lender. On average, you can expect to close on the loan within a couple of weeks.
Sub prime lenders charge higher interest rates. Thus, it may help to have a 3% to 5% down payment in order to obtain a low monthly payment. Even so, sub prime lenders may offer no money down loans to individuals with a FICO score of at least 600. If you do obtain a high interest rate, work towards improving your credit, and then refinance the mortgage at a lower rate.
To view our recommended bad credit mortgage companies online, visit this page: Recommended Bad Credit Mortgage Companies .
Carrie Reeder is the owner of ABC Loan Guide , an informational website about various types of loans.