| Subprime mortgage lenders specialize in offering | | | | Conventional lenders offer the best rates and |
| financing to people with poor credit or riskier loans. | | | | reasonable fees. However, there is a wide range in |
| Conventional lenders focus on low-risk loans and | | | | rates and fees between lenders. |
| borrowers. While you will find better rates with | | | | No matter what type of financing you choose, request |
| conventional lenders, suprime companies offer more | | | | quotes from dozens of lenders. This protects you |
| flexibility in requirements and loan terms. | | | | from scams and unscrupulous companies, while |
| Easier To Qualify For | | | | ensuring you get the best package. Finding a low rate |
| Subprime mortgages are easier to qualify for than | | | | is one of the easiest and biggest ways of saving |
| traditional loans. Since these lenders are willing to | | | | yourself money. |
| accept a higher level of risk, they offer a variety of | | | | No Worries Over PMI |
| packages. For example, someone with bad credit can | | | | Subprime lenders don't require private mortgage |
| still find a zero-down 30 year mortgage. You may also | | | | insurance (PMI), unlike traditional lenders. PMI can add |
| opt for a lower rate with an ARM or fixed-rate home | | | | over a hundred dollars on your monthly payment. |
| loan. | | | | It is required for conventional loans when the down |
| For jumbo or unconventional loans, you may have to | | | | payment is less than 20%. You can get around this |
| work with a subprime lender. Since these types of | | | | requirement with conventional lenders by taking out |
| loans are harder to sell to the secondary market, | | | | two mortgages from separate companies. Another |
| some conventional lenders won't handle them. | | | | option is to put 20% down on your conventional loan, |
| Higher Rates | | | | but take out a home equity loan after the deal closes |
| For the increased level of risk, subprime lenders | | | | to access your cash. |
| charge a higher rate, usually a couple points more than | | | | Just to make things more confusing, more and more |
| a conventional loan. You may also find more fees or | | | | conventional lenders are entering the subprime market. |
| points, especially if you want to waive early payment | | | | If you do need subprime financing, still request quotes |
| fees. | | | | from traditional lenders since you may still qualify. |