How to Tell if You Have a Subprime Mortgage
Realizing exactly how to tell if you have a subprime
mortgage used to be quite simple. Many times the lender would
openly tell you. Now consumers are often left to guess which leaves
many confused about the type of loan they have.
There are several ways you can tell if you have a subprime mortgage,
the determination of whether you have a subprime mortgage is sometimes
easy to determine, but at other times, it can be much more difficult
to actually determine. If you are fully aware that you have terrible
credit then you can be almost guaranteed that you possess a subprime
mortgage. However those consumers who have credit that is decent
are often shocked to discover that they have a subprime mortgage.
Several key issues that should be an immediately red flag would
be the presence of an interest rate that is substantially higher
than the market average. This means if at the time you obtained
your mortgage the typical interest rate that was offered is around
a 5% range and instead your mortgage is accompanied by a rate in
the 15% range then it should be a very clear indication that you
are looking at a subprime mortgage.
An addition way how to tell if you have a subprime
mortgage is if
you have been permitted to purchase the home
with less than 20% for a down payment. While this is not always
a surefire method to determine if you have a subprime mortgage it
is generally a very good indication that you are considered a credit
risk if you are required to purchase mortgage insurance.
While the mortgage insurance is generally required for those who
get a mortgage for more than 80% of the house financed it is always
required for a borrower that is considered subprime.
There are two types of mortgages that are extremely popular in
recent years that are particularly common for subprime borrowers.
The first is a low-doc mortgage where the paperwork required to
be approved is substantially less than in a conventional mortgage.
The second type of mortgage is the no-doc mortgage where there is
no documentation for the loan to be approved. Typically, in these
low-doc and no-doc mortgages there is very little if any documentation
that pertains to income. This generally is what is used to help
people secure a home mortgage that would otherwise have great difficulty
proving income in order to receive a good mortgage.
It is important to realize if you have a low-doc or a no-doc mortgage
you are typically considered subprime due to the fact that the income
cannot be fully verified. This may or may not have any reflection
at all on your actual credit history. If you have good credit but
no documentation to prove your income you are still considered quite
risky to a lender, especially following the housing bust that has
recently occurred due to the subprime mortgage crisis. As you can
see there are several ways to determine if you have a subprime mortgage
and ensure that you are fully aware of what your mortgage type is,
and how it affects your budget.
Additional Resources:
How do you know if you have subprime mortgage problem?
Subprime Mortgage Loans - Things you should know about subprime mortgage
Subprime Mortgage Lender Guide
Ways to Find Out if You Are Facing Subprime Mortgage
Re-Finance Your Subprime Mortgage in 6 Easy Steps
|
