Who is theNonprime mortgage for?
If you have had any of the below situations maybe you are a candidate for a Nonprime loan:
- Short sale or Deed In lieu of Foreclosure
- Bankruptcy Chapter 7 or Chapter 11
- Bankruptcy Chapter 13
- Bad credit or Slow credit
- Self-employed with limited income, high assets and a large down payment
A nonprime mortgage is a type of mortgage that is normally made out to borrowers with lower credit ratings. Those borrowers are unable to obtain conventional loan due to low credit scores and poor credit rating. A nonprime mortgage carries an interest rate higher than the rates of prime mortgages. Prime mortgage interest rates are lend to customers with the best credit histories. Prime mortgages can be either fixed or adjustable rate loans. Nonprime mortgage loans are adjustable rate mortgages (ARMs). A nonprime mortgage is generally a loan that is meant to be offered to prospective borrowers with impaired credit records. The interest rates on nonprime and prime ARMs can rise significantly over time.
Today the new nonprime mortgage is more responsible due to all the regulations and laws that were passed in the past several years. Those laws made the nonprime loan more responsible. An example of some of those changes are:
The Ability to Repay law (ATR)
Appraisal Independent Regulations (AIR)
Borrower needs to have skin in the game by putting down larger down payment
This type of loan will be a good use for someone who is interested in purchasing a real property while they are working on improving their credit or for seasoned real estate investor. Today’s nonprime mortgages are an alternative solution for those who are unable to purchase or refinance thought the conventional means of mortgages.