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Poor Credit? Get a Sub-Prime Mortgage Now, and Refinance to a
Conventional Mortgage Later
There are great mortgage loans for people with poor credit,
and yes, you can still save thousands of dollars. In order to
receive preferential treatment for mortgage professionals, you'll
need a credit score of 680 or better (this is considered A
credit). If you have a score that is less than 600, you'll fall
into a sub-prime loan category. Now, you'll need to get creative,
in order to get your mortgage and not lose a fortune.
A sub prime lender will offer you virtually any type of loan
that a conventional lender will offer, but you'll pay a much
higher interest rate, as a risk premium. In other words, these
lenders consider people with low credit scores risky borrowers,
because they may have some poor payment history. Lenders like
people who pay all their bills on time, even though it is not at
all uncommon for people to occasionally miss a payment for one
reason or another. So, the sub prime, or non-conforming, or
niche, lender says, "We'll take the risk, but we want to make a
lot more money, in order to do it." Don't worry. You can get it
done, and improve your situation to refinance at a better rate
later.
Let's assume you have poor credit, and you want to purchase a
house for $100,000. You also have only five percent to put toward
a down payment. You bring a twofold problem to the lender - poor
credit and a very high loan-to-value, or LTV. You need to borrow
$95,000 on a $100,000 home, so your LTV is 95%. As a general
rule, lenders like purchasers to bring 10 to 20 percent of their
own money to the table, again lowering the risk for the lender;
they feel that the more money a borrower has in a deal, the less
likely she is to default. So, your mortgage professional will
find his best sub-prime lender, and take your application to
him.
Now, if your debt-to-income ratio (amount you owe monthly vs.
gross income monthly) is 50% or less, and your credit score is
above 500, you'll likely get your $95,000 loan. Your interest
rate, however, will be between 10% and 12%, creating a very large
monthly mortgage payment. So, how are you going to win the
mortgage game, in this case? You have two options.
First, you can improve the loan by reducing the LTV. In other
words, instead of taking a loan at 95% loan-to-value, you apply
for a first mortgage of $80,000 (80% LTV) and a second mortgage
of $15,000 (15% LTV). Here's how you save money. Instead of
borrowing $95,000 at, let's say, 12%, with a payment of $977, not
including taxes and insurance, you have a loan for $80,000 at
8.75%, for a payment of $629. Your second mortgage is at 13%,
with a monthly payment of $166. Now, your combined monthly
mortgage payments with two loans are $795, saving you $182
monthly over the first mortgage at 12% and $2,184 each year.
The second option is to take an adjustable rate mortgage,
which offers great savings, just like conventional loans. If you
take a 2-year ARM, which sub prime lenders offer, you might be
able to get a rate of 7% or 8%, instead of the 10% you'd likely
get on a 30-year fixed loan. You might also talk to your mortgage
professional about combining option one and two, and taking an
ARM on your first mortgage at 80% LTV and still taking a second
mortgage for $15,000. This could save you even more.
Get a free mortgage course to learn more.
Mark Barnes is an investment real estate and real estate
finance expert. Get his free mortgage finance course at
http://www.winningthemortgagegame.com.
Mark is also the author of the new novel, The League, a shocking,
sports-related conspiracy. Learn more about his suspense thriller
at http://www.sportsnovels.com.
 MORE RESOURCES updated Thu. February / 09 / 2012
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AgedLeadStore.com to Add 1100000 Aged Mortgage Refinance LeadsMiddle East North Africa Financial NetworkCOM, January 26, 2012 ) Baltimore, MD AgedLeadStore.com is increasing its value for its customers by adding 1.1 million aged Mortgage Refinance Leads in February. This is important as many people depend upon their ability to refinance to make progress ... |
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New HARP Could Help Up to 6.7 MillionNASDAQOther changes to the program were designed to make it easier for homeowners with private mortgage insurance (PMI) to refinance or to obtain a HARP mortgage refinance with a lender other than their current mortgage servicer. In addition, new limits were ...and more » |
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Boehner On Refi Plan: Bad Idea, Obama!Mortgageorbby MortgageOrb.com on Thursday 02 February 2012 Any hope for bipartisan support of President Obama's mortgage refinance proposal was squashed by House Speaker John Boehner, who dismissed the new initiative as a continuation of failed policies.and more » |
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Purchase a Home
If you are currently looking for a new home, chances are
that in all the excitement you won't really give any
thought to the type of home loan mortgage you take out,
instead going with the first one offered to you. This could
be a serious mistake - costing you thousands, if not tens
of thousands.
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Continue to Offer High-Risk Loans
Home prices in the Untied States continue to soar, and the
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continues. The median price of a new home, which only
recently crossed the $200,000 barrier, is now $215,000.
A Qualified Mortgage
Consultant Can Help Boost Credit Scores
Consumers interested in purchasing or refinancing a home
will pay an interest rate based on current market
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consideration by the lender, as well as the predictability
factor provided by credit scoring.
Who Could Benefit From A
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What is a "Reverse Mortgage?"Also known as a Home Equity
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Mortgage Debt Elimination
in 5 to 7 years!
Mortgage Debt Elimination shows that most home loan debts
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Buying a Home With Poor
Credit Is Easier Than Ever
Buying a home with poor credit is easier than ever with
online mortgage brokers. You can easily find sub prime
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Get the Best Rate on
Your Home Mortgage Loan
Home mortgage interest rates hit record lows in 2004 and
have remained at record lows as we go through 2005. It is
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look hard enough! However, record low mortgage rates do not
mean that you should take the first mortgage offer made to
you, even if it sounds low.
Desperately Seeking Good
Leads, The Adventure Driven Loan Officer
As loan officers, the word "lead" is by far one of the most
common words we use during the day, it is the topic of many
of our conversations, it is praised and cursed, it is good
and it is bad, it is loved and it is hated, on bad days it
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Option One Mortgage
Loans - Getting an Option ARM or Option One Mortgage
Loan
Have you heard about or been interested in finding out more
about option one mortgage loans? They are becoming very
popular, but its important to understand how they work
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loan or option one mortgage loan.
What is a Reverse
Mortgage?
Simply stated, a reverse mortgage is a loan that enables
homeowners (age 62 and older) to convert part of the equity
in their home into a tax-free income without having to sell
the home, give up the title, or take on a new monthly
mortgage payment. More and more homeowners are using this
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Doing a California
Refinance Online
Californians are passionate people. I know.
Refinancing Online - Get
The Best Refinance Home Loan You Can Get
When going to refinance or get a mortgage loan quote, the
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Kings Bay Georgia
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When choosing the right mortgage company for your home
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your home purchase.
Remortgages
Guide
Outlined below is a useful remortgages guide. Remortgaging
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Mortgage Loan Most
Bankers Wont Give May Be Exactly What You Need to Buy or
Refinance Your Home
A few years ago, a loan officer who worked for me was
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business and had very little patience for problems (as you
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Reverse Mortgages - A
Tax Free Income For Senior Citizens
I fully realize if it sounds too good to be true, it
probably is and There Is No Such Thing As A Free Lunch
(TANSTAAFL) immediately jumped into your head when you read
the title of this article. However, if you are 62 or over,
you may have just found the goose that laid the golden egg.
Home Loans and Mortgages
- Tips to Avoid Foreclosure
Today's real estate market is a volatile one; prices are at
record levels and Interest rates are favorable, but
foreclosures are increasing. Wages haven't kept up with
home prices and some buyers who had to stretch to find a
way to obtain a mortgage in the first place are having
trouble making their payments.
Home Equity Lines of
Credit - the Basics
A Home equity line of credit is a loan which is similar to
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(In most cases even lower than home equity loans).
Mortgage Cycling -
Brilliant or Risky
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What is a Self-Employed
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Self-employed mortgages, as the term implies are mortgages
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