Compare Lenders
The number one way to lower your interest rates on your sub-prime mortgage is to compare lenders before you apply. It sounds so simple, but too many homebuyers skip this step, costing them thousands.
Plan on taking at least a day to explore your options. The easiest way to look at financing packages is to request quotes online. While you are requesting quotes, take a look at conventional lenders as well. They often offer good rates and terms for those with adverse credit histories.
Pick An ARM
Adjustable rate mortgages (ARM) offer lower rates and are easier to qualify for than fixed rate mortgages. The drawback is that ARM rates can increase over the years. But if you are planning to move soon or just want to buy a home, then an ARM probably is your best choice.
Second Mortgage Secrets
Everyone has heard of a 2nd mortgage at least once in their life! However, most people might not understand what a 2nd mortgage really is. A 2nd mortgage is one the more important tools in both commercial and residential real estate, and can raise much-needed funds for home owners.
The reason behind the idea of a 2nd mortgage is fairly simple. It means that you take a loan against the equity in your home the value not already loaned to you by your regular mortgage. Thus a 2nd mortgage releases capital to you, and is secured on your property just like your regular mortgage. Most fin ..
You can also convert your ARM when your credit score improves. As property prices increase and your equity builds, you will also be able to get better terms in the future.
Increase Your Down Payment
By increasing your down payment, you can knock off up to a percentage point. Zero or little down financing is great for those short on cash, but rates are significantly higher. Ideally, you want to put down 25% to get the best rates. Just leave enough cash reserves to financing moving expenses.
Pay A Point Or Two
Secondary Mortgage Market Sets the Standards and Practices for Mortgage LendingThe Secondary Mortgage Market is responsible for the setting many of the rules and common practices that determines who gets a home loan. The secondary market includes Fannie Mae (Federal National Mortgage Association or FNMA), Freddie Mac (Federal Home Loan Corporation or FHLMC), Ginnie Mae (Government National Mortgage Association or GNMA) and a variety of other investment oriented institutions. These institutions set the standards because they are the ones that will often buy and service your home loan after you have purchased your property. Although your lender handles all of your initial p ..
Points paid upfront can also lower your interest rate. You want to be sure though that you recoup the upfront costs. If you plan to move or refinance in a couple of years, you will not see the savings of lower rates.
You may also find that your money would be better spent on increasing your down payment than on paying points. With this type of decision, you will want to do some math with a mortgage calculator.
Bulk Up Cash Reserves
By increasing your cash reserves, you can also improve your credit score to qualify you for lower rates. Take advantage of tax refunds or cash bonuses by putting them into your savings. Lenders look at saving accounts, money markets, and CDs as cash reserves, not stocks or other volatile assets.
About the Author: Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans. View her recommended lenders for Poor Credit Mortgage Loans.
Source: http://www.isnare.com Carrie ReederSub-Prime Mortgage Loans - Five Ways To Lower Your Rates On A Sub-Prime Mortgage
