Ok, so your credit score is kind of low and you're having a tough time finding a bank to lend you money at a reasonable rate. You're looking for the best subprime mortgage lender to get you the best rates.
Even though your credit score is subprime, there are lenders who will still lend or refinance your debt at a competitive rate. You just have to shop around online.
There are several online lending marketplaces where lenders compete for your business. There's no obligation to go with any of them. You can search for competitive quotes to get the best rate possible, especially as mortgage rates are on the decline.
When looking for the best mortgage subprime lender, look for longevity, a healthy balance sheet, a proven track record, and good customer ratings.
Best Subprime Mortgage Lender
The great thing about online rate aggregators is that you can apply for a no obligation loan online in minutes. Within the hour, you'll get competing banks e-mailing and calling you about their best rates. Then you can pit their offers against each other some more to get the best terms possible!
You, the borrower don't even have to pay the marketplaces a penny. It's the lenders who pay them to compete for your business. As a result, lenders are motivated to try and get you the best loan possible to win your business.
Just a heads up. The celerity of the lenders can be quite surprising to those who are not used to such quick service. However, their e-mails and phone calls will die down after several days if you are not interested.
I like to get multiple quotes in writing and then bring these quotes to my main bank to negotiate. Using this strategy, I was able to get my bank to refinance my jumbo loan to a 2.75% interest rate from their initial 3.125% offer in 2020.
Why You Should Refinance Now
Real estate is my favorite type of investing. I believe everybody should at least own their primary residence to get neutral the ever rising property market. Once you own, it's all about lowering your property taxes and getting the best mortgage rate possible. After all, a big part about growing your net worth is doing everything possible to minimize expenses. I'm also bullish on rental properties and big city real estate.
If you are a new homebuyer or want to refinance, it's important to shop around. Get as many bids as possible to get the best mortgage rate and terms.
In a continued low interest rate environment, I prefer taking out a 5/1 ARM amortizing over 30 years. Why pay a higher rate when the average length of homeownership is 10 years?
You can certainly go for a 30-year fixed loan if you want absolute peace of mind. If you believe interest rates will be aggressively higher in the future, a 30YR could be good. But if the 5/1 ARM mortgage rate is at least 1% cheaper, then I would strongly consider an ARM.
Take the monthly interest savings and save or invest it. There's a interest rate hike cap that's fixed for one year after the fixed adjustment of an ARM is done. There's also a lifetime interest rate cap that's usually no more than 4% – 5% higher than the initial rate. You can always refinance your ARM before the fixed period is over like I've done many times before.
Take Advantage Of Lower Rates
Take advantage of the best subprime mortgage lenders by shopping for the lowest rates online. You can get no-obligation real quotes in minutes to help you get a better rate.
I've refinanced three different properties over the past 13 years multiple times, and my combined interest savings a month is roughly $4,000. That adds up to well over $1,000,000 in interest savings over the life of the loans!
If you can find a home that's a good deal, you can afford the payments, and plan to stay there for 10+ years, then I would take advantage of record low interest rates and buy property.
Invest In Real Estate
If you're looking to make money in a declining interest rate environment, check out real estate crowdfunding. When interest rates go down, demand for real estate goes up because real estate becomes more affordable.
I've personally invested multiple six-figures in real estate crowdfunding through companies like Fundrise after selling my expensive SF rental property. Fundrise is the most well-capitalized and most innovative real estate crowdfunding platform today. It is free to sign up and explore.
In an inflationary environment, you want to buy real estate. Inflation acts as a tailwind for real estate prices. Inflation also whittles down the real cost of a mortgage.
About the Author:
Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate.
In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $300,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom.
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