Subprime Loans
Years ago, the subprime loan was left to the Thrift and Loan industry, and the finance companies, such as Beneficial Finance, AVCO Finance, HFC, etc.  The subprime industry has now evolved with an organized secondary market, where institutions can buy and sell these loans much like normal “A” paper loans.  This has made this kind of loan more readily available, easier to package and has made the rates more competitive than they have been in the past.

Among the variables are the type of documentation necessary, the loan to value and, subsequently, the type of pricing offered.

The important things to look out for when researching and structuring these types of loans are as follows:

• Loan To Value: Loan to value is an extremely important variable in this type of loan.  If you have a low enough loan to value, many other problems can be overlooked.
• Credit Score: Many of the lenders base their decision on the credit score. The higher the loan to value, the more important the credit score becomes.
• Documentation Of Income And Assets:  In the subprime arena, this is more flexible than in “A” paper loans.  In fact, many subprime lenders will consider 12 or 24 months of bank statements sufficient for full documentation.  In the case of stated income loans, the reserve requirements are not as stringent as what they are in “A” paper stated income products.

Contact your Freedom Financial mortgage professional today to discuss your specific loan situation.