September 20, 2007

Sub-Prime Mortgage Loan - How Sub-Prime Loans Differ from Conventional Loans

Mortgage Tip! If you are renting and are applying for a mortgage to purchase your home, you will need the names and address of your landlords for the past two years.

Sub-prime mortgage loans offer more flexibility than their conventional
mortgage loan cousins. With terms determined by Freddie Mac and Fannie
Mae, conventional loans have strict guidelines on loan amounts, terms,
and PMI requirements. With sub-prime mortgages, lenders can provide
more choices with an increase in rates.

The Limits Of A Conventional Loan

Conventional loans are often sought for their low rates. But those low
rates come with limitations. Freddie Mac and Fannie Mae buy mortgages
after they have been processed by a financial company. This frees up
money for the lender to make more loans. However, Freddie Mac and Fannie
Mae have tight guidelines on what types of loans they will purchase.

Mortgage Tip! The singles payment option requires the buyer to make a one-time single payment that is typically financed as part of the mortgage amount.

Among these limitations are caps on loan amounts. In 2006 the limits
were set at $417,000 for a single family house. Every year these caps are
reevaluated. Conventional home loans also require you to carry private
mortgage insurance if you borrow more than 80% of the home's value.

To qualify for a conventional mortgage, you must have good credit, cash
assets, and steady employment history.

The Options Of A Sub-Prime Loan

Sub-prime home loans provides financing for those with poor credit or
unusual application terms. This can include jumbo loans, exceeding the
limits of a conventional loan. People with unusual or unpredictable jobs
may also find an easier time getting financing with a sub-prime lender.

Mortgage Tip! you can apply for a mortgage after bankruptcy even with bankruptcy discharged yesterday and just about any time you want.

Sub-prime mortgage terms are determined by the individual lender. So
you can get a zero down loan with a poor credit score. You can also find
near market rates by placing a large down payment at closing. Private
mortgage insurance is not required with a sub-prime mortgage,
potentially saving you hundreds a year in premium costs.

Getting The Right Mortgage For You

Most financing companies handle both types of loans, so you can easily
get quotes for both types. To find the right mortgage, you have to take
the time to crutch the numbers.

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Look at the APR to determine the total cost of the loan. But also
factor in any plans to move or refinance in the future. By turning over your
home loan in a few years, you don't want to pay out large application
fees for low rates that don't have time to save you money

Bankruptcy Mortgage Book. How To Qualify For A Home Mortgage After A Bankruptcy.

Carrie Reeder offers advice about
Subprime Mortgage Loan Companies Online.

View our
Recommended Subprime Mortgage Lenders Online.

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