| Loans for people with less than good credit | | | | The ads are everywhere. "Buy a new house. |
| scores are possible to get, but risky. To protect | | | | Refinance your present home. Bad credit, no |
| yourself, here's what you need to know. | | | | problem!" What they don't tell you is that you're |
| If you have a bad credit history or your income is | | | | going to end up paying thousands of dollars more |
| lower than average, you're what's known as a | | | | in interest. |
| "subprime" borrower. | | | | Besides paying higher fees and interest to get |
| Lenders will still give you credit, especially if you're | | | | your mortgage, there's another important fact |
| willing to use your most valuable asset - your | | | | you need to know. |
| home - as collateral. | | | | Subprime mortgages have lousy track records. |
| But there are generally some serious strings | | | | More than 16% are delinquent and another 4% |
| attached. | | | | are in foreclosure. These are much higher |
| So before you jump into an enticing home equity | | | | statistics than for non-subprime mortgages. |
| loan with adjustable rate mortgages, interest only | | | | This doesn't mean you shouldn't take out a home |
| payments and 125% LTV financing, follow the | | | | equity loan. It only means you should be careful |
| advice of the Federal Reserve Board: "Borrowers | | | | before jumping in over your head. |
| Beware!" | | | | Before applying for a loan clean up your credit |
| Twenty-five years ago, loans for people with less | | | | reports. |
| than good credit scores were virtually unknown. | | | | Correct all mistakes and bring your payments up |
| Bankers wouldn't even talk to them. | | | | to date. You can also request creditors to |
| But that's all changed. Lenders now welcome | | | | remove late payments from your file. If you're in |
| subprime borrowers with wide open arms. | | | | good standing, they'll usually do it. |
| Borrowing money in the last ten years is a whole | | | | And, if you ask, they might even increase your |
| new ball game and anyone can play. | | | | credit limit, which improves your credit score. It's |
| The once conservative banking industry is now so | | | | certainly worth a try. Even a small increase in |
| hungry that just about anyone can borrow | | | | your score can save you thousands of dollars in |
| money. Since the mid '90s loans to subprime | | | | interest. |
| borrowers increased by an astonishing 400%. | | | | Then, do your homework before moving ahead. |
| Subprime mortgages are now a multi-billion dollar | | | | Check out all options. Go over the small print with |
| business. They went from less than 5% in 1994 | | | | a fine tooth comb. And, by all means, watch out |
| to over 20% of the market in 2005. | | | | for those unscrupulous lenders that specialize in |
| What's this mean to you? If you have bad credit, | | | | loans for people with less than good credit scores. |
| it means you can find lenders willing to take a risk | | | | They prey on subprime borrowers, promising |
| on you. However, it will probably cost you a | | | | anything just to get their hands on your money. |
| bundle for the privilege of borrowing. | | | | So watch your wallet and protect your home. |