A prime mortgage lender is a lender, who primarily caters to consumers with good credit scores of 650 or above, whether they need a home purchase loan, home equity loan or HELOC loan. Some prime lenders also provide subprime loan products.
A subprime mortgage lender specializes in loan products for people with bad credit due to large debt loads, a history of Chapter 7 or Chapter 13 bankruptcy or poor debt management skills. A reputable subprime lender takes all factors of a person's situation into consideration, when reviewing a loan application. They will not turn you down for a refinane loan, simply baecause of your low FICO (Fair Isaac Corporation) score.
What is a FICO Score?
Your FICO score ranges from 300 to 850, with 300 being the lowest credit score you can have. One assumption is that the more debt you have (e.g. numerous credit cards), the more likely you are to pay your bills late. Late bill payment is the number one reason for a majority of low credit scores. This factor accounts for 35% of your credit score.
Finding a Subprime Mortgage Refinance Loan
Not all subprime mortgage lenders are created equal. Some lenders offer loans at high interest rates and add additional fees, penalties, etc. The best way to find a reputable subprime lender is to do your research.
Begin by finding a list of 3 or 4 subprime lenders, who offer less-than-perfect credit refinance loans - Cash out refinance loans, home equity loans, HELOC loans, etc.
Select a lender that you feel comfortable with and has a good reputation.
Apply for a loan, ensuring that you complete the application thoroughly and truthfully.
Sharon Listner writes about finance and conducts in-depth analysis on various consumer loan products.
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