Subprime Mortgage Lenders Differences Between Subprime And Other Lenders

Subprime Mortgage Lenders - Differences Between Subprime And Other Lenders
Subprime mortgage lenders specialize in​ offering financing to​ people with poor credit or​ riskier loans .​
Conventional lenders focus on​ low-risk loans and borrowers .​
While you​ will find better rates with conventional lenders,​ suprime companies offer more flexibility in​ requirements and loan terms.
Easier to​ Qualify For
Subprime mortgages are easier to​ qualify for than traditional loans .​
Since these lenders are willing to​ accept a​ higher level of​ risk,​ they offer a​ variety of​ packages .​
For example,​ someone with bad credit can still find a​ zero-down 30 year mortgage .​
You may also opt for a​ lower rate with an​ ARM or​ fixed-rate home loan.
For jumbo or​ unconventional loans,​ you​ may have to​ work with a​ subprime lender .​
Since these types of​ loans are harder to​ sell to​ the​ secondary market,​ some conventional lenders won’t handle them.
Higher Rates
For the​ increased level of​ risk,​ subprime lenders charge a​ higher rate,​ usually a​ couple points more than a​ conventional loan .​
You may also find more fees or​ points,​ especially if​ you​ want to​ waive early payment fees.
Conventional lenders offer the​ best rates and reasonable fees .​
However,​ there is​ a​ wide range in​ rates and fees between lenders.
No matter what type of​ financing you​ choose,​ request quotes from dozens of​ lenders .​
This protects you​ from scams and unscrupulous companies,​ while ensuring you​ get the​ best package .​
Finding a​ low rate is​ one of​ the​ easiest and biggest ways of​ saving yourself money.
No Worries Over PMI
Subprime lenders don’t require private mortgage insurance (PMI),​ unlike traditional lenders .​
PMI can add over a​ hundred dollars on​ your monthly payment.
It is​ required for conventional loans when the​ down payment is​ less than 20% .​
You can get around this requirement with conventional lenders by taking out two mortgages from separate companies .​
Another option is​ to​ put 20% down on​ your conventional loan,​ but take out a​ home equity loan after the​ deal closes to​ access your cash.
Just to​ make things more confusing,​ more and more conventional lenders are entering the​ subprime market .​
If you​ do need subprime financing,​ still request quotes from traditional lenders since you​ may still qualify.

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