How to Use Subprime Mortgage Lenders to Your Advantage

You can use subprime mortgage lenders to help you if you know what you're doing.

I'll repeat that.

You CAN use subprime mortgage lenders to help you if you know what you're doing.

The main thing to remember is that the responsibility is on you to follow the plan which will be laid out forthwith, and to make sure that even in the worst case scenarios, you will have the money to pay what you need to pay when you need to pay it.

Use subprime mortgage lenders to your advantage. Here's how.

Difficulty: Easy

Instructions

Things You'll Need:

• 12 months emergency fund
• Knowledge of rental environment
• Good negotiating skills

1. 
    
   The secret to beating subprime mortgage lenders is PREPAYMENT.

   The key to beating subprime mortgage lenders is prepayment, prepayment, prepayment.
   
   So make sure you get preapproved for a home loan that does not penalize you if you prepay. This is crucial.

2. 
    
   Subprime mortgage lenders all have teaser rates. Pay off your property within that time period.

   Note the subprime mortgage lenders' teaser rates and how long they last.
   
   The key is prepayment within the teaser rate period. You should budget to have the house totally paid off within that period. That's the only way you win.

3. 
    
   Meet the three conditions listed without fail when looking for a property.

   Study the housing market to find depressed markets. The conditions must be right. They are:
   
   1. Undervalued house/foreclosure
   2. Rising market value in the near future
   3. Motivated seller
   
   If all of these conditions are not met, DO NOT BUY with subprime mortgage lenders.

4. 
    
   Have a large down payment ready for the subprime mortgage lenders.

   Choose a property, and this should NOT be a primary residence, that you can rent out and gain a monthly positive cash flow. You will be investing this cash flow into PREPAYMENT.
   
   You should be able to put down at LEAST 50% on this property, CASH.
   
   Study the average rents in the area, calculate your mortgage payment, and calculate your cash flow.

5. 
    
   Bid, bid, bid.

   If you are considering foreclosures or short sales, you must bid on multiple properties, because banks will try to hold them until the market goes up, and that ruins your plans. Just bid, bid, bid.
   
   Also, you must have at least 20% of the purchase price set aside for repairs. This is SEPARATE money from the 12 month emergency fund listed at the beginning. Consider hiring a property manager to take care of the contracting. You don't want to have to worry about this when you're dealing with subprime mortgage lenders.

6. 
    
   Use all extra monies to improve the property.

   Once you have your property, and your subprime mortgage lender locks in, you must dedicate yourself to overpaying the mortgage every month. Use any monies above and beyond that calculated payment to improve the house, so that you can raise rents.
   
   Do not use any equity to finance buying any other real estate until the property is paid off and you are out from under that subprime mortgage.

Resources

• Subprime Lenders Inside and Out

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on 10/25/2009 I'm in the credit management business and this is one of the BEST Ehow articles that I've read, related to credit and money! 5*