While traditional mortgage lenders may disqualify you for a mortgage, obtaining a home loan with bad credit is doable. Various lenders are in the business of lending money to people with a few credit blemishes. These may include late payments, missed payments, bankruptcy, foreclosure, etc. Sub prime mortgage lenders offer loans to individuals who do not qualify with a bank or mortgage company. You can expect to pay a higher interest rate. On the other hand, once your credit rating improves, you can refinance your mortgage loan after the prepayment penalty period and receive a lower rate.
Benefits of Using a Sub Prime Mortgage Lender
The majority of banks and traditional mortgage lenders are unwilling to grant a loan to individuals with bad credit. The likelihood of a bad credit applicant refusing, or being unable to repay the loan is high. Sub prime mortgage lenders are prepared to take a risk. These lenders charge higher fees. This allows the lender to make a profit even if the property forecloses. The interest rate offered by sub prime lenders vary. Thus, you should compare rates and services of at least three different lenders.
How to Apply for a Mortgage Loan with a Sub Prime Lender
Applying for a mortgage loan with a sub prime lender is quick and easy online. There are several advantages to submitting an online request. For starters, you do not have to contact several lenders to receive a quote. A single online application will offer you multiple quotes from various sub prime lenders willing to negotiate a deal. After submitting a request for information, lenders will review your credit report and remit several quotes. Your responsibility involves comparing estimated interest rates and fees. Once you have selected the lender with the best offer, submit a request for an official quote, or estimate. Within a few days to a week, the lender will mail the paperwork for you to sign, which closes the deal. Before signing loan documents, carefully review all information. If the sub prime mortgage lender is local, you may come into the office to sign documents.
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.