Upside Down Mortgage

Subprime Fico Score

Question: Subprime loan question?

How do I know if I have been offered a sub-prime loan?
I need to know this before I confront my mortgage. My fico score is around 601, I make a decent living income over 60,000 a year. I received a good faith estimate with an interest rate of 6.50. Loan amount 185,000. However I have no details as to what type of loan the GFE says conventional and 30 year fixed. Why is pre=paid interest of $517 on this GFE

Answer: I would like to answer your question. You have a sub prime loan. You only qualify for a sub prime loan. I understand you make a good living, and that is not the punishment loan. Your fico is low. Anything under 640 is subprime, no cash reserves is sub prime, stated income or stated asset or both is a subprime product. I am not sure why nobody has explained this to you as it is not a punishment to the borrower. It is fitting the program to what you are seeking and what your other financials look like. I am not sure that you have to confront anyone. 6.5 is a great rate, as most were running closer to 7.5 just a few months ago. The prepaid interest is for the days that you will have the house without the payment. You close on the 15th of a month you will not pay the payment for that month, and you will not have a payment the following month. The interest is not the principal payment so the lenders charge that up front. The numbers you are showing are good numbers. I see no issue at all with this offer. Take a breathe and relax. Ask your mortgage broker to explain the GFE line by line, and remember the numbers will change based on the day you actually do close so they will not match at settlement. That is why it is called estimate not final statement. If you have other questions email them to me at [email protected] and put yahoo answers in the subject line. From the math, it appears to be a good deal with an honorable broker. Good Luck

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