Subprime mortgage brokers offer a variety of mortgage loan
packages from different lending companies. They can find
financing for almost anyone, regardless of their credit score.
Even though brokers offer a valuable service, you still need to
ask questions to be sure you are getting the best deal.
1. What Is Your Fee?
Before you begin working with a subprime mortgage broker, ask
how they are getting paid. Sometimes they charge you an upfront
fee, other times they are paid by the mortgage company.
Upfront fees don't guarantee you the best deal, but they do
reduce the broker's reliance on mortgage companies' fees.
Instead of looking at who offers them the best payoff, they are
looking at your interest.
Fees paid by the mortgage company can still mean you find a good
deal. Most brokers are able to negotiate lower rates for you, so
you still come out ahead. Using this type of broker also allows
you to work with a couple of brokers, making sure you find the
best deal.
2. What Are The Loans Fees?
Even when brokers present you with rate quotes, take the time to
look at fees and points. The APR should include both the rates
and fees. It is required to be disclosed before signing a
contract so you can make a real comparison. Sometimes the lowest
rate loan has the highest closing fees and isn't the best deal.
The rates presented to you are somewhat flexible. You can reduce
them by paying more points or increasing your down payment.
Points only make sense if you plan on keep the loan for a number
of years.
3. Are There Early Payment Fees Or Other Clauses?
Also check for early payment or other fees. Subprime mortgages
are often refinanced when your credit score improves. Check to
see if you can pay a point to waive the early payment fee if you
plan to refinance.
Some subprime lenders will automatically refinance your loan for
better rates after two years. This can save you thousands on
later refinancing costs. Just like any loan offer, check the
rates with other packages.
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