Subprime Loans Still Available
Subprime, subprime, subprime. That seems to be all we’re hearing about in the financial news lately. Does this mean that people with less than stellar credit can’t get a home loan any more? Far from it actually. While it’s true the 100%, no income, no asset, sub 600 scores of the past few years are gone, probably forever, borrowers with bad credit can still get a loan.
An extreme example is in an email I received a little while ago. This particular lender will loan to people with a credit score as low as 440, with bank statement income, 60% debt ratio and a rate in the mid 9% range. What’s the catch? They’ll only loan 70% of the value of the home and only for a refinance. That’s the extreme.
Other lenders will loan 90% for purchases and refinances with credit scores down to 520. Where subprime has really tightened up is in the stated income or no income type loans. They simply don’t exist any more.
So don’t fret if you have bad credit and want to buy a home or need to refinance your existing mortgage. As long as you have W-2 job a or are self employed and can provide two years of tax returns and a down payment or equity, the chances are real good you can get a home loan.
Not every subprime lender is in trouble right now and there are quite a few out there who have money to loan on deals that make sense. Yes, the easy money of the last few years is gone for now, but inexpensive home loans can still be obtained.