Credit Score Diaries: Journey to an 850 Credit Score

Wednesday, March 29, 2006

You Can Get A Good Loan With Bad Credit

I recently got a loan for a triplex for 5.85% five year fixed, with no fees, no prepayment penalties, no documentation, and this loan was available with a credit score down to 580! You don't have to have great credit any longer. The trick is knowing which lenders to use. They are usually "direct lenders", lenders with fewer commissions because they directly own the funds for your loan. They are also usually lenders that have "money on sale", lenders that are desperate to unload all their excess funds. We provide names of some lenders with really good programs in our "MUST HAVE AUDIO" for 2006. Don't settle for less than the best ever!

The best way to find these companies is to see who’s advertising. A couple of years ago, Ameriquest was advertising a lot, and they specialize in sub-prime loans, or loans where people don’t have the best credit score. When a company’s advertising to lend, that’s a great indicator that they really have a lot of money. Banks borrow the money at the federal funds rate, which is, 3.5 to 4% right now. Some of them have a surplus of reserve funds, So, they advertise to get more customers. Most consumers don’t notice advertising as a subtle sign that a certain lender has better deals.

It is estimated that 70% of all the loans are being written through commissioned third parties—mortgage brokers or loan brokers. In the Northwest they have names like Pacific Mortgage, or Pacific One Mortgage. These mortgage companies advertise in the paper and have commissioned salespeople. Personally, I don’t like to deal with broker firms. These people are experts at talking you out of a good interest rate because they put food on the table by talking you out of the lowest rates.


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