BENEFITS OF CHOOSING SUBPRIME HOME LOAN LENDERS TO BUY A NEW HOME: 3CALoan
Mostly every person had a dream of buying their own home. For most people, they require money in the form of home loan for buying a new house.
Over 10 years ago, there were many types of home loan available in the market. Home loans like “A paper” loans which issued by banks and in this type of loan the loan lender require all the income documents and plenty of reserves with a good credit score, “Alt A” this loan is an alternative to A paper loan, for those people who couldn’t quite meet the requirements of A paper, hard money home loans is a loan which issued by a private investors and it is good for people with bad credit score and poor condition of property, subprime loan is a loan for those people who couldn’t fit into the Alt A box.
The loans which are available after the housing market crashed were hard money home loans and A paper loans. This means you only have two choices, you either had to have all the requirements need for A paper loan or you will be able to pay higher monthly payments and have a large down payment for hard money home loans
WHAT CHANGED?
After few years, In the housing and mortgage market subprime lending has made its way back. But, the new subprime loan is nothing like the old one which receives so much criticism after the market collapsed.
Old subprime consisted mainly of 30-year loans with rates fixed for 2 years and a 2-year prepay penalty. After 2 years, your interest rate was scheduled for a significant increase, like 3% added to the rate. The new subprime loan is completely different from the old one. In the new subprime loan, you can get rate fixed for the full 30-year term, 7 years or 5 years of the mortgage. There is no prepay penalty for owner-occupied home and it is the best part of this loan. Another big difference is that the rates of this loan can be much closer to the rates for an A paper loan. The main features of subprime home loans are:
DOWN PAYMENTS
In the old subprime loan, it was possible to take a home loan without any down payment and with no proof of income. But, this was a bad idea, as proven by many of foreclosures that resulted. In hard money home loans, the lenders require 30-40% down payment and subprime home loan lenders require as little as 10% down payment, as per your credit profile.
For example, the borrower had 600 credit score and no bankruptcy in the last 18 months or foreclosure in the last 2 years then they would be able to buy a home with 20% down. If someone had 680 credit score and no bankruptcy or foreclosure for the last 3 years then they could buy a home with as little as 10% down.
INCOME DOCUMENTATION
Now the Income documentation is required by law that all borrowers have to show their income proof to prove that they have the ability to pay the monthly payment and other payments of the home loan. So, it’s a legal requirement not to get proof of the income and borrower can also use the different method of proving the ability to pay by giving their bank statement. By the bank statement, the borrower can show what Is going into his bank account.
CREDIT REQUIREMENTS
In subprime loans, the credit requirement is much more lenient than they are for “A paper” loan. If you have a default in your credit like bankruptcy or foreclosure, banks require much more time to pass your loan before they will lend to you than what is required for a subprime loan. So, subprime loans will allow you to buy a home if you have had something happen. You can take the subprime loan even if you have credit scores as low as 500, but subprime home loan lenders will require an explanation of what has caused this would be needed. The subprime loan has another benefit that subprime home loan lenders do report your payment history which can help to improve your scores so that you can get lower rates on future home loans.
FINAL THOUGHTS
If you still have any questions about subprime home loan lenders or need a loan, we are happy to help. We know that sometimes people have a harder time for getting a loan. That’s why we offer multiple different alternative financing options. You have to be careful and avoid making any costly mistakes. Our competitive rates, efficient services, and talented team can help ease the process of the home loan. We help our customers every step of the way. We prioritize informing and educating our clients about the home buying process. Our client’s happiness and confidence upon closing a deal reflect our excellent quality services.
3CALoan local mortgage broker provides no tax return home loan which is also called no tax return, without tax return, without tax return, private hard money home loan, private hard money loans, bank statement home loan, bank statement loan, equity loan and many more. If you still have any doubt, you can contact us at (818) 322-5626 or (818) 3CA-Loan today! Our specialists will be in touch promptly to answer your questions. We will run you through the details of home loans and hold your hand throughout the process. We only have one aim of helping people first.
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