Get a Subprime Mortgage or Wait Until Your Credit Improves?

Subprime mortgages are a type of loan that is made available to those with bad credit. If you are in need of a mortgage and you have bad credit, you will need to decide between a subprime mortgage or waiting until your credit improves. Here are a few things to consider about this decision.

Interest Savings

If you were to wait until you have better credit, you would be able to save a substantial amount of money in interest. With subprime mortgages, you are going to be paying a much higher interest rate than you would with a traditional mortgage. In some cases, you might have to pay as much as twice as much.

Time Considerations

You will need to look at your current credit score and determine how long it would take you to get it fixed. If you are barely in the subprime lending category, it might only take you a year or less to repair your credit. If you have recently completed a bankruptcy or foreclosure, it may take as long as 7 to 10 years to fix your credit. If you can wait, you would be better off financially to do so. However, if you need to purchase a house quickly, it may be in your best interest to use a subprime mortgage.

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