Mortgage Refinance Rates

Helpful Tips When Getting a Subprime Mortgage Loan

There are a few things to know about subprime mortgages lenders. The interest rate on a subprime mortgage loans will be higher than any other type of mortgage loan where credit, income and down payment are all optimal. However, with subprime mortgage loans, as a borrower, you need to be careful about a few things when dealing with subprime mortgage lenders.

The interest rate with subprime mortgages can vary greatly. Make sure you are getting the best interest rate possible with your subprime lender. A typical subprime mortgage loan will have a 6 month to a 2 year pre-payment penalty. However, sometimes a subprime lender will offer a loan with a 3 year or higher pre-payment penalty.

 3 Things to Know About Subprime Mortgage Lenders

The subprime mortgage industry is growing by leaps and bounds. Unfortunately, not all subprime mortgage lenders are created equal. Here are three things in particular that borrowers should know about subprime mortgage lenders:

1. Rates Vary

If you have bad credit, you should expect to pay a higher interest rate than the average borrower. When shopping for a loan, you will find that the interest rates charged by subprime lenders can vary significantly.

2. Prepayment Penalties May Apply

Subprime mortgage lenders often tack on conditions to the term of your mortgage. If you plan on refinancing later to save money on interest rates, you should be wary of penalties that last too long into your loan term.

3. Exaggerating Income is Bad

To get borrowers approved, some subprime mortgage lenders encourage the act of exaggerating income on a mortgage application. By Carrie Reeder

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