Subprime Mortgage Lenders - 5 Red Flags to Watch Out For
If you are trying to apply for a mortgage loan and you have bad
credit then chances are you will be applying with a subprime
lender. Subprime lenders specialize in financing people with a
bad credit history.
Subprime mortgage loans are a good thing if you can get a
reasonable interest rate and terms. Then, once your pre-payment
penalty period is over you can refinance with a lower interest
rate. However, since there are fewer mortgage options for those
with bad credit it is easy to unknowingly purchase a loan that
is more expensive than what they should qualify for.
Here are five things to look our for when choosing a subprime
lender:
1. Make sure the lender provides you all the closing costs and
fees in writing at least twenty-four hours before they close.
Many subprime lenders will charge high fees at closing because
they figure people will pay them because of their reduced
options.
2. If the subprime lender is trying to get you to borrow more
than you can realistically afford with your finances then they
are definitely not a good lender to go with. These type of
lenders and loans will usually just lead to foreclosure.
3. Check into pre-payment penalties. Nearly all subprime lenders
have pre-payment penalties involved. Make sure you know the
amount and period that these penalties involve. After you sign
the papers, it is too late to change these penalties or get out
of the loan. A long pre-payment penalty will make it longer
before you can refinance your loan.
4. Make sure the lender provides you your interest rate in
writing before signing the papers. This is one of the most
prominent areas where people are affected. Always get the
interest rate in writing and make sure you choose the one that
is competitive and comparable.
5. Do not sign with a lender asking for a fee upfront. When you
are applying for a mortgage loan the only fee you should have to
pay is for the lender getting your credit application. Some
subprime lenders will ask for processing fees that are very high
in order to process the loan. Lenders asking for these upfront
processing fees should be avoided.Our Recommended Bad Credit Mortgage Lenders Online:
Mtg Lenders For People With Credit Problems:
-Updated 2008-:
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