Subprime Mortgage Loans Understanding Different Credit Ratings

Subprime Mortgage Loans Understanding Different Credit Ratings



Subprime Mortgage Loans – Understanding Different Credit Ratings
Regardless of​ bad credit,​ you​ can get approved for a​ mortgage loan .​
Credit ratings vary person-to-person .​
a​ high credit rating will make you​ a​ good candidate for a​ prime mortgage .​
On the​ other hand,​ if​ your score falls below a​ traditional lender's minimum requirement,​ you​ must choose a​ subprime mortgage loan.
How Credit Rating Affects Loan Approval
Mortgage lenders are more eager to​ approve a​ loan application if​ your credit rating is​ high .​
Individuals with high credit scores are less likely to​ jeopardize their rating .​
Thus,​ late mortgage payments and foreclosures are low among this group.
Those with a​ low credit rating may pay more for their mortgage .​
This includes higher finance fees,​ which increases mortgage payments .​
Each lender has different criteria for determining high credit and low credit ratings.
Traditional lenders are very strict when it​ comes to​ mortgage loans .​
Some lenders establish high credit score minimums,​ which disqualifies many homebuyers .​
When selecting a​ mortgage loan,​ it​ is​ essential to​ choose a​ lender that specializes in​ loans for your credit category.
What Does a​ Bad Credit Rating Mean?
Lenders use different wording to​ term bad credit ratings .​
Some simply refer to​ these applicants as​ having a​ low or​ negative rating,​ whereas others assign alphabet letters .​
In this case,​ those who qualify for prime rates have A-credit and B-credit .​
Meanwhile,​ individuals with a​ lower score have C-credit or​ D-credit.
Individuals with C-credit or​ D-credit will pay a​ higher interest rate for their mortgage .​
This is​ because those in​ this category have more credit problems .​
Homebuyers with C-credit have up to​ six 30-day late payments,​ three 60-day late payments,​ open collection accounts,​ and bankruptcy or​ foreclosure within the​ last twelve months.
Sadly,​ some homebuyers have credit situations that place them in​ a​ different category .​
The lowest credit category is​ D-credit .​
This groups includes homebuyers with charge-offs,​ judgments,​ open collection accounts,​ and bankruptcy or​ foreclosure within the​ last 6 months.
Getting Approved for a​ Mortgage Loan with Low Credit Rating
Although many lenders offer subprime loans to​ those with C or​ D credit,​ it​ may be favorable to​ defer buying a​ home until credit improves .​
This opens the​ door for better rates,​ and lower mortgage payments .​
If deciding to​ buy a​ home with bad credit,​ shop around and compare mortgage quotes .​
By doing so,​ you​ can review many financing options before choosing a​ lender.




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