Sub prime lenders offer second mortgages to people with bad credit.
Charging slightly higher rates for the higher risk level, sub prime companies help you access your home's equity. With so many lenders online, vying for your business, you can find better rates by shopping around. Even with poor credit, rates can be as little as .5% higher than traditional equity loans.
Higher Rates For Higher Risk
Sub prime lenders by definition deal almost exclusively with people who
have
scores 649 or less. They can even provide financing the day after your
bankruptcy. For this increased credit risk, they charge rates anywhere
from
5% to 12%. Unscrupulous lenders will charge even higher rates or
expensive
fees.
To find what is reasonable, start requesting rate quotes. Not only will
you
get an idea of market rates, but you can sift through the scammers too.
When
you request a quote, be specific with your credit standing. You can
always
request your credit score from a credit monitoring service or reporting
agency.
Competitive Lenders Vie For Your Business
The internet has made the financing sector more competitive. With
consumers
clicking their way through financing offers, lenders can only stay in
business by offering low rates and fees. A smart shopper will find
these
offers online.
Without having your credit score dinged by credit inquires, you can ask
for
general quotes online. By giving general information about your income,
home's
value, and general credit, you can get a good idea about rates.
Some sub prime lenders will also offer lower fees or rates by
processing
your application online. Financing companies save costs by working
online,
savings they can pass onto you.
Smarter Shoppers Get Better Rates
To make your rate search easier, start with a mortgage broker site. By
submitting your information once, you will receive multiple offers. If
you
find some promising offers, you can follow-up. If you have time,
research
individual lender sites. They too can offer great deals.
Before signing any contract, make sure you understand all the fees and
rates
involved. An initial low rate can be an expensive loan if closing costs
are
high. Use the APR to find the truly best deals. Also factor how long
you
plan to keep the loan. Lower fees and higher rates may be a better deal
for
those who plan to sell or refinance in a couple of years.
Here are our recommended
home equity
and
second mortgage lenders online.
Carrie Reeder is the owner of ABC
Loan
Guide, an informational website about various types of loans.
