Subprime mortgages: A growing option for customers with bad credi
Syd Johnson
If you are new to the country of for some other reason was shut out of financing for a while, you might not have enough information on your credit file about your spending habits, credit cards and more to warrant a regular mortgage application.
Subprime mortgages are designed to accommodate high risk clients. In the real estate financing industry high risk always comes with high interest rates. It is not unusual for a subprime loan to carry rates that are three points or more above the national average. In addition, the loan amounts tend to be a bit smaller.
How do you know if you are a candidate for a sub prime home mortgage? If you have been turned down by local lenders based on your credit and payment history then you might fall into this category. If there are problems in your file that cannot be corrected within a year or two then you might want to start looking into sub prime home loans.
On other hand, if you have a few problems in your file but there is a chance you can get them cleared up within two years or less, you might want to focus on cleaning up your file. Once you are done, your FICO score will probably go up and you can try again to get a regular home loan.
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Syd Johnson
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