Subprime Mortgage Lenders are in financial trouble because too many customers are defaulting on their loans. KRON4's Maureen Kelly finds that one former customer of one subprime lender was talked into a loan she couldn't afford.
mortgageapproved.blogspot.com Subprime Loans
A subprime mortgage seemed like a good idea for many aspiring homeowners just a few short years ago. It was the most touted real estate loan by most lenders. Unfortunately, after taking out the loans, many borrowers realized just a bit too late, that they were not able to meet their loan's requirements. Thankfully, there are ways to get out of the predicament now.
Subprime Mortgages - What Are They?
To give you a brief background, subprime mortgages are usually offered to people with a poor or bad credit history. Since low credit scores did not prevent folks from getting approved, these mortgages were often the last resort. Of course, the terms often included high interest rate, loan application fees as well as balloon payments and prepayment penalties.
Refinancing A Mortgage
Here are five quick steps to help you refinance your subprime mortgage.
Step 1: Timing is important when refinancing a mortgage.
It is vital that you take action when the timing is just right, especially if your existing mortgage comes with an adjustable interest rate.
Just before the interest rate adjusts to a higher rate, Before your pre-payment penalty is activated and Before the required balloon payment is called. If you don't have those key pieces of information about your mortgage, you can always contact your lender and ask for it.
Step 2: Re-evaluate and assess your credit rating.
Have you made any improvements to your credit score since it was last reviewed? There are several things you can work on right now, to repair your credit.
You are entitled to one free annual credit report from each of the three major credit bureaus, Equifax, Experian, and TransUnion, so take advantage of that opportunity.
Step 3: Have a steady source of income.
Creditors always want to be reassured that their borrowers have a steady sources of income. That steady job ensures that you will always have enough money to at least cover the interest payments of the loan.
To qualify for a second mortgage or eliminate your existing loan, you must prove that you have a stable job and steady paycheck. If your income is strictly cash, provide documentation certifying that your cash income is constant and steady.
Step 4: Evaluate the equity in your home.
How much home equity do you have left? If the equity is 10% or less of the value of the property, chances are you might not be eligible for the best refinancing rates at the moment. Start reducing the size of your existing mortgage before applying for a second mortgage.
Step 5: Shop, Compare, and Apply
Once you have lined up all the details and are ready, the only thing left to do is shop for best mortgage rates, make comparisons, and submit your application.
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