Subprime lenders finance high risk groups to enable them to buy a home. While you need to be aware of predatory lending practice, by researching lenders you can find a mortgage loan at a reasonable rate.
Bad Credit Factors
Before you sign up with a subprime lender, be sure that you truly have bad credit. There are five factors that determine your credit score: payment history, credit history, amount owed, types of credit, and new credit. Each of these factors are weighted differently, so a series of late payments on one account may be offset by low debt, no new credit inquires, and other factors.
A FICO score less than 570 will require you to use a subprime lender. However, you may be able to still use a traditional mortgage lender by providing a large down payment, qualifying you for lower interest rates.
Subprime Financing Versus Predatory Lenders
Subprime lenders offer genuine financing so you can purchase your home and repay your loan. Predatory lenders seek to strip your home equity, charge excessive interest rate, and foreclose on your home.
Predatory lenders will often list their site on public forums in an effort to lure...
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