Why You Should Avoid
Subprime Lenders
With the financial markets
in crisis and the cost of homes plummeting, the subprime loan options that were
responsible for this crash in the first place are becoming less common. But
there are still lenders offering these risky loans, and this article will
convince you to avoid what may seem like an offer too good to refuse,
especially if you are having trouble finding a traditional loan. Here are three reasons why you should avoid
subprime lenders!
High Interest Rates
The most obvious reason to
avoid subprime loans is the high interest rate that comes with them. In most cases, if you fall into the subprime
category you represent a higher risk than normal for the lenders, and the
increased rates protect their investment.
Inevitably in this category a certain number of borrowers will default
on the loans, and the higher rates ensure that the lender still makes
money. This means that you will be
paying more for your house than it may ever be worth, and it essentially no
longer becomes an asset, but rather a liability.
Questionable Business
Ethics
Another reason to stay
away from subprime lenders is their track record of questionable business
practices. The bailouts of the last few
years are proof that many financial institutions have been making unwise
business decisions, and avoiding them is a good idea. You should only deal with lenders who have a
good reputation and a proven track record of a high level of customer
service. Your Premier Beach Realty Agent can give you
advice on lenders who fall into this category.
Increasing Your Debt Load
If you are considering a
subprime loan, you likely already have some debt and perhaps even a credit
score problem. While getting a subprime
loan may seem like your only option for homeownership if you fall into this
category, getting a subprime loan will just put you further into debt. There are other options for getting a
mortgage, and seeking out the advice of a financial advisor can prevent you
from making an unwise financial decision.
Homeownership should
always be a sound financial decision, and despite your current financial
position there are good options. With a
little knowledge and a bit of shopping around you will find a mortgage to suit
your budget and needs, while protecting your investment at the same time.