Mortgage: HOW TO AVOID A SUBPRIME MORTGAGE: Cleveland Real Estate

By:
CJ Harrington
Keller Williams Realty
www.cjharrington.com
cjharrington.crs@gmail.com
440.336.0612

Date:
10-20-08

So, what exactly does subprime mean anyway? Well, subprime references the borrower's credit rating, so the easiest way to avoid getting a subprime loan is to have a prime credit rating.
Don't know your credit rating? I suggest you take a journey online and do some research then. There are many available credit scoring sources online. For example, Bankrate.com offers a FICO score estimator to get a free estimate or pay for your credit score from one or more of the three main credit bureaus -- Equifax, Experian or TransUnion. So, make this step first.
Some other things to avoid include no-equity loans, no-documentation loans or ninja loans. A ninja loan is slang in the mortgage industry for no-income/no job -- the mortgage applicant doesn't document his or her income or employment. Sound familiar to some of the lending fraud articles you may have read recently, well it should.
The harsh reality is that subprime lenders and borrowers counted on rising home prices and low interest rates to finesse traditional underwriting standards for mortgage lending, allowing home buyers to stretch in qualifying for financing. Seventeen rate increases by the Federal Reserve in its targeted federal funds rate and a stalled reality market later, should we be surprised that some subprime loans are unraveling?
So, before you start, there are a few things you should consider. Firstly, take a fresh look at your household budget to determine how much you can spend on a mortgage each month. Next, request free copies of your credit report. Finally, educate yourself, you can't expect not to face a bad outcome unless you familiarize yourself with all of the variables generally associated with financing a home, such as interest rate policies, terms, points, fees, etc. This means, check into how to guides, play with some online mortgage calculators, and most importantly read a few articles that pertain to today's landing market. You will be happy you did.

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