Home Loans For People With Poor Credit - Understanding The Requirements For A Subprime Mortgage
Written by: Carrie Reeder
Home loans for people with poor credit demand that you understand the requirements for a subprime mortgage loan to get the best rates and terms. By satisfying the requirements, you can be assured of securing a subprime mortgage to buy a home.
Time To Rebuild Credit
Depending on subprime mortgage lenders, you can be approved for a mortgage loan after two to three years of a foreclosure or bankruptcy. Within those three years, by making regular payments, you can end up having a good credit score.
If you simply have a poor credit score due to late payments, you will probably still qualify for a subprime mortgage. However, the longer period you have of on time payments, the better your score and rates will be.
Down payments reduce the risk for mortgage lenders. So with a FICO score of 600, you could apply for a zero down mortgage. A FICO score of 585 or higher will require at least 5% down.
Debt To Income Ratio
Another factor in subprime lending is your debt to income ratio. The amount you pay out for loans, like credit cards and car payment, are deducted from your income's buying power. The less debt you have, the more you can qualify to borrow. The less debt you have, also makes you more appealing to mortgage lenders, even with poor credit.
Subprime mortgage lenders also take a look at your cash reserves in determining your credit risk. Mortgage lenders like to see a minimum of two month's worth of payments in a savings account or bonds. A larger cash reserve will increase the likelihood of your mortgage loan's approval.
Be Your Own Advocate
Subprime mortgage lenders offer a service to people who would not otherwise qualify for a mortgage loan. But, you still need to be your own advocate and compare subprime lenders. Interest rates, fees, and terms vary widely in the financing industry, so research to find the best deal.
The internet allows for easy comparison of subprime mortgage brokers with instant quotes. You can also find better financing deals online, since Internet subprime lenders have lower overhead and personnel costs.
About the Author
Carrie Reeder is the owner of http://www.abcloanguide.com, an informational website about various types of loans. To view our list of our most recommended bad credit mortgage lenders online, visit this page: http://www.abcloanguide.com/lessthanperfectcredit.shtml
Secured Personal Loans - What you need to know about?
Each one of us needs money to fulfill our personal needs. It
could be to buy a dream car or to go out for a luxurious
holiday. Do you know you can use equity in your home to get a
loan? Yes, it's true. Secured personal loans are tailored to
Don't Let The Depreciation On Your Motorcycle Affect Your Motorcycle Loan
The depreciation on new motorcycles can be very quick as soon as
you dive it away from the showroom. As a result, as a motorcycle
buyer entering a loan agreement you should look for a motorcycle
that is in high demand and will have less...read more
Student Loan Consolidation
Student loan consolidation is one of the most used methods for reducing and working off student debt. If you want to consolidate debt, whether itís a student loan debt or not, you have to follow a certain process. However, this process is easy to...read more
Return to Home