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Help for Subprime Borrowers
Author David Schneider | Aug 29,2007
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Subprime borrowers face several obstacles when trying to finance their homes. They may find it difficult to find a lender to work with, they may find it difficult to qualify for a loan and predatory lenders may target them. With all of these challenges, it is no wonder why there is a multi trillion dollar foreclosure trend that is sweeping this country. Fortunately, there is help available for subprime borrowers.
Education
Education is your first line of defense against predatory lenders and mortgage troubles. Before you apply for a loan, you need to understand what your options are, what type of borrower you will be classified as, what laws are in place to protect you, what responsibilities you will have when you take out a mortgage, what costs are normally associated with closing a mortgage and what is not normal. Once you have a solid understanding of what is and is not normal for subprime mortgages, you will be less likely to fall for a scam and you will less likely to have someone take advantage of you.
Subprime Mortgages
If you have a credit rating under 680, you are going to have a difficult time qualifying for a traditional mortgage. However, this doesn't mean you can't buy a house. What it does mean is that you will need to select an alternative or exotic mortgage instead. These mortgages tend to have higher interest rates and more fees associated with them, but they also have easier qualification criteria.
Refinancing Can Help
Subprime borrowers who took out a bad mortgage and are now in financial trouble because of rising interest rates or unfavorable terms have the option of renegotiating their mortgage or refinancing it. Your first step needs to be to talk with your current lender to see if you can renegotiate your loan terms. If your lender is not willing to do this, then you can check to see if your state will allow you to freeze your interest rate while you either sell your home or refinance it. If you want to refinance your home, then you may want to look into the Fannie Mae Home Stay Initiative to see if this program can help you obtain refinancing.
Who is Trying to Help
The foreclosure rate in the U.S. is on the rise. This trend has been at least partially caused by unfair subprime mortgages. In an attempt to ease some of the burden caused by these loans, and to help reduce the number of foreclosures in the U.S., several companies have begun to buy subprime mortgages to help subprime borrowers. Freddie Mac has bought over $20 billion in subprime mortgages, Fannie Mae has offered to buy over $10 billion in subprime mortgages and WaMu has even stepped in to offer a fund worth $2.6 billion to help out subprime borrowers. These are the companies that you want to talk with if you need help with your subprime mortgage. |
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