How are sub-prime mortgage lenders coping with the crisis?
Answer:Basically, sub-prime mortgage lenders have been tightening sub-prime mortgage underwriting requirements - as fully opposed to the ease mortgage loans were issued once. Real bad credit borrowers still can find sub-prime mortgage lenders willing to extend money. It is more difficult to those who need to go stated income and need to borrow with more than 95% LTV.
Bad Credit Mortgage Loans: Hard to Get
However, sub-prime mortgages right now are particularly hard to obtain. Even though only less than 15% of the borrowers fall into the sub-prime category with credit under 620, their number was enough to shatter several (more than 20) sub-prime lenders. Some of those either shut their doors, or sought bankruptcy protection.
In result, the other sub-prime lenders have really tightened up loan guidelines. Credit scores have to be higher, loan amounts are smaller, rates are higher and larger down payment is required.
Our advice: Be sure to ask your lender about FHA loans. FHA loans have very competitive interest rates because the loans are insured by the US Federal Government. Even if you have had serious credit problems, such as bankruptcy, it is easier to qualify for an FHA loan than a conventional loan. Also, taking an FIXED rate loan while the interest rates are still low is a smart idea. Check your eligibility here:
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