Subprime Mortgages – Low Down Payments And No Pmi

Sub-prime mortgages have become an essential option for individuals with poor credit, providing opportunities to finance the purchase of a home. These loans offer various benefits and features, making homeownership more accessible for many.

Sub-prime mortgages offer a range of options similar to conventional loans, including:

- Low Down Payments: Sub-prime loans often require low or even zero down payments, making it easier for those with limited savings to buy a home. However, it's important to note that lower down payments typically result in higher interest rates.

- No Private Mortgage Insurance (PMI): Unlike conventional loans that require PMI for down payments under 20%, sub-prime mortgages usually do not require PMI, reducing monthly costs.

- Buying Points: Borrowers can buy points to lower their interest rates. This strategy is beneficial if you plan to keep your mortgage for seven or more years. Another approach is to improve your credit score and refinance in two to three years for a conventional loan.

More and more financing companies are offering sub-prime mortgages. Even Freddie Mac and Fannie Mae have sub-prime programs. To find the best rates and terms, request quotes from both conventional and poor credit lenders.

When comparing lenders, look at the APR for a quick check. The APR includes interest rates, points, and fees. However, you should also examine terms to ensure there are no fees for refinancing or early payment.

To quickly gather this information, use the internet. Most lenders offer quotes online, and you can also request quotes from a mortgage broker, who will provide several quotes at once. When you find a lender with a competitive bid, request more information or apply online for speedy approval.

Sub-prime mortgages provide the chance to purchase a home while improving your credit history. Instead of throwing money away on rent, you are building up equity in your home that you can tap into later. Regular mortgage payments will also improve your credit score, helping you secure better financing options in the future.