Subprime Loans Can Help If You Have Poor Credit

Getting a home loan can be difficult if you have poor credit.  Many times, the only thing you can do is obtain a subprime home loan.  A subprime home loan lender specializes in obtaining financing for people with a poor credit history.

A subprime mortgage can be good if you can obtain a reasonable rate and then refinance as soon as possible.  Many people obtain a subprime loan with this goal in mind, but somewhere along the way, they are still unable to obtain better financing, and the boom is lowered on them when the interest rate on the loan they have balloons.  

Many unscrupulous lenders will force a borrower into a more expensive loan than what they should be able to qualify for.  Therefore, you should always shop around and get quotes from more than one lending agency.

Before you get a loan, you need to have the closing costs and all fees in writing at least 24 hours before closing.  Unscrupulous lenders will not disclose the fees until closing, and then they will charge higher fees than necessary because they now have the borrower in a tight spot.

Know what your realistic ability to make payments is.  Do not obtain a loan that has higher payments then you can afford.  Do not assume you will be getting a better paying job or that the price of the home is going to increase and you can sell it for a profit before the rates increase.  These things can, and will lead to foreclosure, which will really destroy your credit rating.

Ask about pre-payment penalties.  Almost all subprime mortgage loans come with pre-payment penalties.  The percentage and the time vary, and many companies will negotiate the penalties with you before you sign.  After you sign, it is too late.  You are stuck with the penalties that are in your contract.  This may mean you are unable to refinance for several years because the cost can be too high.  

Also, get you interest rate in writing.  Many subprime lenders will fleece the unsuspecting borrower, by having higher interest rate in the contract then was verbally given.  

Be sure and shop around.  Compare several lenders, and you will be able to get a much better loan and save money.