For the best rates and fees, look to a prime lender to give you top financing due to your excellent credit score. For those with poor credit, turn to a sub prime lender for reasonable rates on mortgage loans. You will also find more flexibility with a sub prime in drawing up terms and conditions in your loan contract.
When Prime Lenders Are Best
If you have an excellent credit score and a solid financial base, look to a prime lender to get you the market rates and fees. With near perfect payment history and cash assets, you can bank on getting superb rates.
To get even lower rates, do some comparison shopping online. Working with a mortgage broker can save you time in your search. You can also negotiate further rate reductions by paying points at closing.
But if you are looking at a down payment of 20% or less, you will need to carry private mortgage insurance. Annual premiums cost around a thousand or more. Once your assessed equity value equals 20%, you can then drop the insurance.
Special Cases For Sub Prime Lenders
Sub prime lenders handle financing for special cases, whether that is bad credit or unique terms. For accepting mortgage applications with higher risk levels, sub prime companies charge slightly higher rates.
Of course there are shady lenders who charge excessively high rates and fees. But you can avoid these companies by researching several lenders to find a good deal on a home loan.
Sub prime lenders don’t require private mortgage insurance or a stellar credit past. Nearly everyone can qualify for financing; it’s just a matter of what rates and fees you are willing to pay.
Where To Find Your Lender
Nearly all lenders handle quotes and applications online. If you are unsure about which type of lender to turn to, take a look at your credit report. If you are still undecided, ask for loan estimates from both types of lenders.
Even within each type of lender, there is a lot of variation in loan costs based on the terms you select. So consider all your loan options when comparing rates and fees.