A subprime home loan is available to those borrowers with poor or bad credit. These are typically individuals with a FICO score below 620. Because of their poor credit scores, they do not qualify for conventional loans or government loans such as FHA and VA loans.

Because of the increased risk with a subprime home loan due to the borrower's poor credit score, the borrower usually: 1) make higher down payments 2) Pay interest rates 5% or 6% higher than traditional loan rates. 3) Pay higher fees and closing costs.

A large number of subprime home loans carry prepayment penalties, due to the fact that many borrowers use the loan as a short-term solution so they can refinance to a lower interest rate loan.

The time period the borrower stays with a subprime loan should be no longer than necessary. By making payments for all debts on time and clearing balances, a borrower should be able to fix their credit rating over time so that they can refinance with a traditional mortgage, and thus save substantial amounts of money on interest payments.

If this type of loan is the only option the borrower has, their main alternative is to improve their credit score. This can be done by making all of their debt payments on time and paying off their balances. This will improve their credit score so that they can obtain a better loan.

Call us today toll-free at 1-800-595-1474 or use our online loan application if you are interested in a subprime home loan.