One’s credit score is an indication of how likely they’ll pay back a loan or not. When it comes to procuring a home loan, this is the main factor that determines what type of loan and rates that you qualify for.
Bad credit is one thing but should the borrower have declared bankruptcy or suffered a foreclosure, then for sure the borrower would face difficulties when he tries to receive financing for a home mortgage purchase, home equity or second mortgage loan.
Despite the difficulties that may arise when attempting to obtain a loan with bad credit it’s still possible to secure one. The belief that home loans are not available for people with bad credit history is just a baseless myth. Mortgages are available to everyone regardless of their credit history. The difference is the quality of loan that someone with good credit qualifies for compared to someone with bad credit.
The most common loan that borrowers with poor credit qualify for are subprime loans. These loans are offered to only those that don’t have credit good enough to qualify for conventional loans. Subprime loans are also options for borrowers with low income or a high-to-low value ratio.
Subprime loans are offered to borrowers that fit a certain mold. The following are characteristics that lenders look for in subprime borrowers:
- Foreclosure within the last two years.
- FICO score below 660.
- Two or more 30-day delinquencies within the last year.
- Trouble paying monthly bills
- Bankruptcy within the last 60 months
- Debt-to-income ratio of 50% or more
It’s evident from the aforementioned financial profile that borrowers that qualify for subprime mortgages aren’t the best when it comes to handling money. That being said, it’s these people that are tied to loans with unforgivable interest rates.
Borrowers should be careful of borrowing money from subprime lenders, as they can charge high interest rates which, comparatively are higher than the market rate. Not only this, but these lenders may also charge unreasonable prepayment penalties.
However, it’s not absolutely impossible to find lenders who give out loans at reasonable rates to people with bad credit histories. All a borrower needs to do is look around and talk to different mortgage brokers.
Things that the borrower should be sure about are that he makes use of the lowest interest rate and terms possible. This is especially true for a borrower with a bad credit history and bad credit score. This borrower should make sure that he sends applications for loans to a number of different lenders, since comparing different mortgage loan quotes will ensure that the best rates and terms are found.
If after shopping around you still aren’t satisfied with what you’ve found, you can take the time to improve your credit score before signing onto a 30-year subprime loan. To talk about how you can improve your credit score consult with the best Fargo mortgage lenders, Affiliated Mortgage. Use this mortgage calculator to help you gain a clear understanding of your financial future.
One’s credit score is an indication of how likely they’ll pay back a loan or not. When it comes to procuring a home loan, this is the main factor that determines what type of loan and rates that you qualify for.
Bad credit is one thing but should the borrower have declared bankruptcy or suffered a foreclosure, then for sure the borrower would face difficulties when he tries to receive financing for a home mortgage purchase, home equity or second mortgage loan.
Despite the difficulties that may arise when attempting to obtain a loan with bad credit it’s still possible to secure one. The belief that home loans are not available for people with bad credit history is just a baseless myth. Mortgages are available to everyone regardless of their credit history. The difference is the quality of loan that someone with good credit qualifies for compared to someone with bad credit.
The most common loan that borrowers with poor credit qualify for are subprime loans. These loans are offered to only those that don’t have credit good enough to qualify for conventional loans. Subprime loans are also options for borrowers with low income or a high-to-low value ratio.
Subprime loans are offered to borrowers that fit a certain mold. The following are characteristics that lenders look for in subprime borrowers:
-Foreclosure within the last two years.
-FICO score below 660.
-Two or more 30-day delinquencies within the last year.
-Trouble paying monthly bills
-Bankruptcy within the last 60 months
-Debt-to-income ratio of 50% or more
It’s evident from the aforementioned financial profile that borrowers that qualify for subprime mortgages aren’t the best when it comes to handling money. That being said, it’s these people that are tied to loans with unforgivable interest rates.
Borrowers should be careful of borrowing money from subprime lenders, as they can charge high interest rates which, comparatively are too high than the market rate. Not only this, but these lenders also charge unreasonable prepayment penalties.
However, it’s not absolutely impossible to find lenders who give out loans at reasonable rates to people with bad credit histories. All a borrower needs to do is look around and talk to different mortgage brokers.
Things that the borrower, should be sure about are that he makes use of the lowest interest rate and terms possible. Specially a borrower with a bad credit history and bad credit score should make sure that he sends application for loans to a number of different lenders, since it would be sensible for him to make comparison between different mortgage loan quotes, so that he makes sure that he chooses the best one.
If after shopping around you still aren’t satisfied with what you’ve found, you can take the time to improve your credit score before signing onto a 30-year subprime loan. To talk about how you can improve your credit score consult with the best Fargo mortgage lenders, Affiliated Mortgage. Use this mortgage calculator to help you gain a lucid understanding of your financial future.
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A Little About Affiliated Mortgage
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