A Subprime Mortgage is a mortgage option available to borrowers who have low credit. Since a borrower who has low credit is a higher risk to the lender, a conventional mortgage is not usually offered due to the borrower having a higher than average risk to defaulting on the loan. The interest charge for subprime mortgage is usually significantly higher than a conventional mortgage. The lenders charge higher interest rates in order to compensate themselves for the risk they take on when funding a subprime mortgage.
Borrowers who have a credit score lower than 600 usually have one option when buying a home, that’s a subprime mortgage. Unfortunately they also don’t have much of a choice in their high interest rates either. Many borrowers who have credit history issues or if they have ever filed bankruptcy only have one choice when it comes to a home mortgage, that’s a subprime mortgage. Since borrowers with low credit have limited options when it comes to mortgage options, it’s almost more worth it to wait and rebuild their credit instead of paying the high interest rates that come with a subprime mortgage.
An assessment will be made of the borrower’s credit worthiness. Since a borrower who has a low credit score imposes such a higher risk for lenders, a lender will usually charge a significantly high interest rate to fund a subprime mortgage loan, than they would for a conventional loan. The subprime mortgage option is for borrowers who have a very low credit rating and who couldn’t get approved for a conventional mortgage loan. It’s a much more favorable option to wait and catch yourself up on any late payments or start rebuilding your credit rather than paying those high interest rates.
Some borrowers don’t have much of choice and need to get themselves and their families into a home, and the subprime mortgage option is the only option for them, at least there is 1 option for them. Some borrowers who have low credit score may feel as if they have no options, but with the subprime mortgage option they at least have one.
Finding a Lender
If you’re interested in a subprime mortgage loan, you can begin your search for a qualified lender right here. Click the link below to get matched with a lender eager to help you with your subprime mortgage loan and answer any questions you may have about the subprime home loan or the home loan process. Shopping around for the right lender couldn’t get easier. Get started today! It only takes a few minutes to get started and best of all, it’s completely free. Get started on your subprime mortgage loan today.