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Has anyone recently purchased a subprime loan?

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homewardbound
Contributor

Has anyone recently purchased a subprime loan?

I just filed Ch. 7 in March 07.  I haven't yet received my discharge papers but most of my debts are showing $0 balances already.  I have no cc's, a car installment loan in amount of $3,000 I pay on time along with all my other utility/rent bills, etc.  I have no other debt whatsoever, but am desperately wanting to get out of the city and purchase a relatively inexpensive townhome for myself and my two daughters.  My salary is decent and definitely can afford the property if I had good credit and would get a good rate.  But right now my score is 550 and I am wondering what kind of offer I might get it any and if any of you have advice or know what the current situation with subprime loan is.
Message 1 of 20
19 REPLIES 19
Anonymous
Not applicable

Re: Has anyone recently purchased a subprime loan?



@homewardbound wrote:
I just filed Ch. 7 in March 07.  I haven't yet received my discharge papers but most of my debts are showing $0 balances already.  I have no cc's, a car installment loan in amount of $3,000 I pay on time along with all my other utility/rent bills, etc.  I have no other debt whatsoever, but am desperately wanting to get out of the city and purchase a relatively inexpensive townhome for myself and my two daughters.  My salary is decent and definitely can afford the property if I had good credit and would get a good rate.  But right now my score is 550 and I am wondering what kind of offer I might get it any and if any of you have advice or know what the current situation with subprime loan is.



Pleeeeeeease stay away from subprime loan. I have one and I thank GOD everyday that I broung my loan from $113K to $31K. My payment were going up up & up every six month. I still have the subprime loan with a 12.5% interest rate and trying to ref. but because of my BK-13 and late payment no banks want to give me a loan. Good luck
Message 2 of 20
Tuscani
Moderator Emeritus

Re: Has anyone recently purchased a subprime loan?

I wouldn't go as far as saying stay away... rather sit down and figure out the numbers and decide how bad you want it, what sacrifices you are willing to make and how much you can afford. Not all sub-prime loans are bad. Many people take a sub-prime loan and refinance once their credit improves.
Message 3 of 20
homewardbound
Contributor

Re: Has anyone recently purchased a subprime loan?

I'm curious to know what type of loan you had, I'm assuming it was an ARM?  Was that the only option available to you?  Can you explain that to me - I definitely want to keep your experience in mind when I am trying to make decisions.  Thanks.
Message 4 of 20
Boswd
Valued Contributor

Re: Has anyone recently purchased a subprime loan?

Yes to what Tuscani advised.   It's true not all Sub primes are rip offs.   But make sure you READ everything and know exactly what your are getting yourself into.   If it is very confusing, budget in a few extra hundred dollars and have a Real Estate Attorney go over it with you.   You are going to get hit with bad interest rates but if you know what you are going to pay each month and you know you can afford it then Sub Primes are all evil.   but I would advise to stay away from ARM'S  with a sub prime and be very leary of interest only for x amount of years.   but you can do it.   It will be hard right now with all the foreclosures that has happend in the past couple of years, so be prepared to have the possiblilty to hold off for a couple of years until your credit can get back up so it's more affordable.
Message 5 of 20
Anonymous
Not applicable

Re: Has anyone recently purchased a subprime loan?

Yes, I do have an ARM. I started with a 7% interest rate and now I am with a 12.5%. Could you imaging paying 12.5 in a 113K loan? The mortgage broker did a great job screwing me up!! Regardless if is an ARM or not, I don't recommend this to anyone. Remember once the interest rate goes up so will your mortgage payment them within two years or so you need to ref again and that means more expensive. You want to reduced the mortgate payment not increases it. Just take your time. I suggest to wait until you can get a regular loan.
Message 6 of 20
Anonymous
Not applicable

Re: Has anyone recently purchased a subprime loan?

 
You will need to have money for a considerable down payment as well as assets for reserves. (usually 2 months of your PITI payment) I agree with Tuscany, look at the numbers and go from there. Rarely, is real estate a bad investment!
 
Regarding subprime loans: ARMS or Adjustable Rate Mortgages and Interest Only Mortgages are not bad loans. They need to be used as a financial tool to get you from point A to point B. If you are in the subprime area, you will not have the option of a 30 Year Fixed. Your choices will almost always come down to:
  1. Option Arm (Not recommended)
  2. ARM
  3. Interest Only (Same as ARM, but payments only cover Interest)

Even if you were an A paper client, often times a short term ARM is your best choice. If you are an investor who relies on appreciation and values cash flow, the Option ARM may be your best choice.

True, there has been a meltdown in the subprime market. The meltdown is more a reflection of Loan Professionals that were more concerned with their finances than their clients and also people speculating while buying their home. The actual loan product was not the problem.

Message 7 of 20
Anonymous
Not applicable

Re: Has anyone recently purchased a subprime loan?

You filed BK two months ago, and you're mortgage shopping ... the shark subprime lenders will smell blood in the water.  You may be able to find one that will give you a mortgage, but it likely will be on such horrible terms that you won't be able to afford it.  Please give it (and yourself) some time.
Message 8 of 20
Boswd
Valued Contributor

Re: Has anyone recently purchased a subprime loan?

That is the best advice so far.
Message 9 of 20
homewardbound
Contributor

Re: Has anyone recently purchased a subprime loan?

Thanks for the advice - I haven't been shopping yet, only reading about these types of loans and wanting to know other's experiences with them.  I do realize I would be smarter to wait two years, but ideally don't want to wait that long.  I'm just trying to get a general sense of how bad my situation is.  I have two young daughters and want to get them placed in a good school district soon, etc. 
Message 10 of 20
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