Subprime Mortgage Lenders - Sub-Prime Loans Now Available Through Traditional Lenders

Subprime loans are increasingly available through traditional lenders, making it possible to secure financing even with a history of bankruptcy or foreclosure. The key to navigating subprime mortgages successfully is thorough research and careful comparison of both terms and rates.

Your Credit History

A poor credit history does not necessarily confine you to subprime lenders. If your bankruptcy occurred over four years ago and you have since established a positive payment history, your FICO score might exceed 600, which is often the minimum requirement for conventional A loans.

FHA loan programs allow applications two years after bankruptcy or foreclosure, and VA loans are also more accommodating of past credit issues. Therefore, do not assume that an adverse credit history automatically necessitates higher-interest subprime loans.

Subprime Mortgages

If your credit remains poor, traditional lenders might still offer competitive rates. As financing options expand, many traditional lenders now provide services for B, C, and D loans.

Subprime mortgages are assessed based on your credit history and, importantly, your mortgage or rent payment history. Provide proof of rent payments through copies of receipts or checks, while mortgage payments can be verified via your credit report.

Remember that subprime mortgages are typically short-term solutions. Once your credit improves, refinancing can help you secure better rates.

Choosing Subprime Lenders

When searching for a subprime lender, it is prudent to consider all available options. Request quotes from both traditional lenders and those specializing in subprime financing. Comparing these offers will help you find the best rates and terms.

Aim for a low APR and avoid prepayment penalties if possible. If you do not plan to keep the mortgage for seven years or more, paying points for lower rates may not be worthwhile. Additionally, an adjustable-rate mortgage (ARM) might offer lower initial rates and greater purchasing power compared to a fixed-rate mortgage.