There are certain requirements that are to be met before customers can qualify for a subprime mortgage. The customer is usually having a bad credit score. The requirements can be stated as follows:-
Down payments
This is a payment made at the starting i.e. before buying a property. Thisis some percentage of whole value. The customers having a FICO score of 600 may not have to pay the down payment as they may get the loan without any kind of payments in the beginning. While the customer of FICO score 585 or higher have to pay some percentage of amounts as down payments which is usually 5%.
Cash in hand
Cash in hand is always an asset to have; it helps to add to the credit score of the customer. Some cash reserves may help in approval of loan fast and easily.
Rebuilding credit
The credit score rebuilding can be achieved by making time to time payments after bankruptcy. The bankruptcy should have taken place at least two years ago so as to qualify for subprime mortgage. In this period the customer can rebuild his credit score by making regular payments.
Debt income ratio
This is another important factor as the less debt and more income can help in approval of loan for a customer with a bad credit score. The debts such as credit card outstanding, car payments etc. are subtracted from the person’s income.
Own advocate
The customer with a bad credit score gets loan only from subprime lenders that too at high rates of interest. The customer needs to advocate himself and keep an open mind. He needs to shop around and bring out a best deal from the market that is best suitable to him. Different lenders have different rates of interest, thus a research work is needed before finalizing a deal.