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Subprime mortgages accounted for 30% of home loans in 2006. Lenders continue to approve these types of loans as home prices continue to rise in many home markets.
Even with poor credit, you can get approved for an unconventional mortgage. Start by arranging your securities. Next, match loan products to your budget needs. Finally, negotiate favorable terms with the lender.
First – get your securities in order
With subprime mortgages, you need to prove that you have the ability to make the loan payments. Lenders look at your assets and your bill payment pattern.
You can create a positive payment history with a credit card. Even with poor credit, credit utilization is important to lenders. Another way to improve your loan application is to increase your cash savings. This means moving any investments you may have, such as stocks, into a savings or money market account.
And while you’re browsing through your finances, check your credit report. Make sure it is as good as possible. Correct any errors or misinformation. Also consider including a letter in your report explaining any extenuating circumstances to your credit problems, such as job loss or illness.
Next – choose the appropriate loan product
Subprime mortgages come in a variety of terms. You can select interest-only loans, ARM payment option, bulk loans, or balloon payments. Each lending product is designed for a specific financial situation. You need to choose the one that best meets your needs.
Finally – negotiate better terms
After you’ve decided on the type of loan you want, shop around for the lowest rates and fees. Request quotes from online lenders to get fast results.
Once you’ve found a good deal, talk to a lending officer to get lower rates and fees. Explain your finances, so they see what your credit should be. And don’t be afraid to bring up competing offers that you’ve found.
Not only can you get approved for a high-risk mortgage, but you can also get lower rates by searching online for mortgage lenders.
Source by C.L. Haehl
