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Has anyone recently purchased a subprime loan?

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Anonymous
Not applicable

Re: Has anyone recently purchased a subprime loan?

Whether it's a prime or a subprime lender, there is always a loan program for which you would qualify but would in no way be able to keep the payments current. Predatory lending practices are still predatory lending practices.
 
The obsessive mantra of "subprimes are evil" will, IMHO, lead to the predators calling themselves something else, lots of people will continue to default on loans they cannot afford, and the media will magically discover this "new phenomenon" in 3-5 years with Dateline, 20/20, et al. stories about age old predatory lending practices. Maybe they'll be Prime Lite, Prime Like, or Prime Ate (as in it ate my money and my credit).
 
A conman goes by many names. More often he changes names the more effective he'll be at conning.
 
Message 11 of 20
Anonymous
Not applicable

Re: Has anyone recently purchased a subprime loan?



Noah_Bodie wrote:
Maybe they'll be Prime Lite, Prime Like, or Prime Ate (as in it ate my money and my credit).

LOL.  Maybe Diet Prime.
 
To the OP:  It's good you are checking out your options, even if some of us have the opinion that delaying your purchase may be the best course of action.  Educating yourself is never a waste of time.
Message 12 of 20
Anonymous
Not applicable

Re: Has anyone recently purchased a subprime loan?

Homewardbound:
There are many of us considering home loans but you should wait until you are in prime territory. Interest rates above 10% is awful. Besides with the contributors we have here at this forum, them and some hard workon your part should improve your scores to reach your goal of home ownership and more!
Message 13 of 20
homewardbound
Contributor

Re: Has anyone recently purchased a subprime loan?

Thanks for the advice.  Do you think it would take a full two year to be in "prime territory" necessarily?  My score is 550 right now and I am beginning to work very hard at rebuilding credit by obviously paying all bills on time and opening a small credit card, etc.
Message 14 of 20
Boswd
Valued Contributor

Re: Has anyone recently purchased a subprime loan?

I don't see why not.   Just get any and all CO's and collections,if you have any, resolved,  don't take on too much credit, if anny, from here on out.   Besides just your FICO score,  you're debt to income is just as important,  so just don't pick up some silly needless debts just to get a quicker point increase.   This will also cut down on inquiries as well.
 
make sure all your bills including Utilities are all up to date, Yes they look at their little CRA as well.   Stay the course, be on time, lower your debt to Income and you should be rewarded in the end.  Good luck.
Message 15 of 20
SoulSmilen
Regular Contributor

Re: Has anyone recently purchased a subprime loan?

This is probably obvious, but I wanted to throw it out there just in case.
 
Don't forget to check out 1st Time Buyer financing, as well. Find out which programs are available in your state and see if you qualify. Many people think "1st Time Buyer" is literal, but it isn't always. Some states have plans where you can't have had a mortgage in only the previous X years.
Message 16 of 20
Anonymous
Not applicable

Re: Has anyone recently purchased a subprime loan?

FHA, VA and naca.com are three sources for a mortgage that don't look at your FICO scores. With FHA and VA you need a year of no lates. I think the same is true of naca. They do however look at your DTI very carefully. Not sure how long out of a BK one needs to be. Check with a mortgage broker who can do FHA. That will give the max number of options.
Message 17 of 20
Anonymous
Not applicable

Re: Has anyone recently purchased a subprime loan?

I just looked up Fannie Mae guidelines for bankruptcies and it looks like 24 months after discharge is the soonest you could be considered eligible for a traditional A-paper conforming loan.  Fannie Mae's online underwriting system is used by a lot of lenders to determine eligibility for prime mortgages.
 
In addition there are lenders who will give you a mortgage based solely on your credit score regardless of your past mortgage payment history and bankruptcy seasoning -- the minimum FICO they'll consider is a 540.  The rates can be decent if you have a good credit score. 
 
There are other opportunity costs to consider besides a higher rate today versus a lower rate tomorrow based on your FICO.  Some of the non-prime lenders were offering fixed rates a few years ago that are equal-to or better than today's prime rates.  Home prices also increased significantly in several parts of the country over that same time period.  Now, sub-prime lending guidelines are more restrictive (which can mean more expensive) because of recent problems in the subprime industry, and some markets are seeing drops in property values.  Sure wish I had a crystal ball.


Message Edited by Cogent on 05-10-2007 10:46 PM
Message 18 of 20
Anonymous
Not applicable

Re: Has anyone recently purchased a subprime loan?

There is really no set "time frame" to when you should start shopping for a mortgage, but I will tell you this from experience and numerous loans I've written.
 
1. Get above a 580 FICO
2. Get your DTI below 45%
3. Wait 1yr after your discharge date (my bank won't even look at you without it being discharged for a year and having 1 upstanding revolving credit line sense the BK)
 
Until you can substantiate these, it's really not in your best interest to get your hopes up as you won't like the outcome.
 
As far as Subprime loans, there is nothing wrong with them.  They are a great tool to help those out that need a helping hand buying a home.  I highly recommend using a "power house" bank for the referal (Chase, Wells, BofA) that way you make sure you aren't being fed to sharks by shopping the phone book.  My bank has numerous partnerships with contracted sub prime lenders all around the world (i had around 1,200 reputible on my books about 6 months ago) that are constantly monitored by the recommending banks.  As far as the loan package goes, it all has to do with your current situation and what you can afford, I know for a fact that there are sub prime programs for 100% financing (80/20) 30 yr amortized with no arms/int only options if that is the route you want to go.


Message Edited by Acidsniper on 05-11-2007 01:41 PM
Message 19 of 20
homewardbound
Contributor

Re: Has anyone recently purchased a subprime loan?

Acidsniper - thanks a lot for the advice about waiting one year and having a minimum score of 580.  I think I will definitely be over 580 in one year and am financially on a much better track than I was before.  I need some more advice on this:  Do you think that in one year with your listed requirements, would I still need to have a substantial down payment in order to get the loan?  I am not sure if this loan would still be considered "subprime". 
 
I am trying to move into the same neighborhood as a friend of mine, and she and I noticed a townhome a few doors down from hers that is selling for a great price.  The owner is selling directly without representation and is very willing to negotiate.  I had asked about a rent to own option and he seemed to be open to this.  The rent would be higher than what I am currently paying, so I wouldn't be able to save quite as much money if I were to move into the townhome now and purchase in one year, but I do think that he would be open to applying a portion of my rent towards the cost of the home.
 
What are your thoughts?  Any suggestions?
Message 20 of 20
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