3 Ways to Benefit from Subprime Mortgage Lenders

Subprime mortgage lenders have taken a lot of heat because of the lending crisis. While they have their drawbacks and limitations, if you know what you are doing, you can benefit from them. There are a number of products that subprime mortgage lenders offer that can help you buy a home:

1. Get Approved With Bad Credit

The biggest way that a subprime mortgage lender can help you is to approve you regardless of your credit. If you have a low credit score, many traditional lenders will not offer financing. They will refer you to someone else or just tell you that you are denied. If you are in the market for a house, nothing can be more disheartening. While it may be a setback, you do not have to take no for an answer. With subprime mortgage lenders, you can still get the mortgage you need. The terms will not be nearly as favorable as they would be with a traditional lender, however, they can help you accomplish your goal of getting a house when you need one.

2. Lower Your Payment

Sometimes when you are on a limited budget, the payment on the mortgage is the only important part. You want a house and you want mortgage, but you do not want to pay as much as a 30-year mortgage requires you to pay. While some might argue that you should not buy a house if this is the case, sometimes you need to. You just cannot currently afford the payment you are being offered.

In many cases, you will have to agree to an interest only mortgage. This type of mortgage is very risky as it does not pay off any of the balance as you go. You make only the interest payment each month and then pay off the mortgage at the end of the loan. If you are at a point where the payment is all that matters, this can be beneficial. Just make sure that you know exactly what you are doing before taking this step as it has hurt many people over the years.

3. Avoid Documentation

A stated income loan is a popular method for those that want to avoid verification. Subprime mortgage lenders offer these loans to those that have trouble proving their income. With this type of loan, you just tell them how much you earn and you are not required to document the income. This type of loan is great if you are self-employed or have a non-traditional pay structure because it is difficult to prove income if you have recently started your own business, etc.

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