We all would like to live in our own homes now wouldn't we? Living in a house of your own gives you a certain sense of security which is second to none. But in today's world, if you want to own a house, you will most probably have to take a mortgage loan against it just like everyone else in the USA. But what about if you have a bad credit rating? Does that mean you can't own a house? Not at all. These are the situations in which subprime mortgage lenders can help you out. These companies are more than willing to loan money to people who have poor credit. The only problem is that they charge high rates of interest in order to cover the high risk involved. This is a wonderful opportunity for people with bad credit and if you too want to take advantage of it then here is a little more information about subprime mortgage lenders which you should know.
Most people with good credit ratings have a score somewhere in the region of 600 to 800. These people get the best deals from banks when it comes to taking loans. They get what is called the prime lending rate. But for people who have credit scores south of 600, getting a loan at prime rates is impossible. Banks simply can't afford to lend money when there is so much risk involved. That's why such people have no other option but to approach subprime mortgage lenders. They already know that they will be paying a higher interest rate than others, but at the end of the day at least they will have a house to call their own. Interest rates vary greatly though. Don't think that it is only on the basis of credit score that they are determined.
Most subprime lenders give out loans with adjustable rates of interest. The main reason for this is because they offer lower rates during the initial few months in order to attract borrowers and then after a while they start increasing the rates on a regular basis. This means that a borrower could end up losing a lot of money over a period of time unless he/she takes the initiative in the beginning and clarifies all these fees and charges before signing any documents.
One other trick that subprime lenders play is tricking customers who qualify for prime loans into taking subprime loans. This is why it is important for you to know your credit score and to apply to at least 2 or 3 prime lenders for a loan before approaching a subprime lender. Even though it is just a matter of a few percent, over a period of 15 or 30 years, it works out to quite a lot doesn't it?