Special mortgages for those with particular needs.

If you have poor credit or little money for a down payment or if you can't document your income, then one of several types of special mortgages may help you buy the home you want at an affordable price.

This page:

  • Introduces several types of special mortgages

  • Explains how sub prime loans help those with poor credit

  • Helps you decide if you need to apply for a special loan

In this section on special mortgages we take a look at bi-weekly mortgages, jumbo mortgages, zero down mortgages, express mortgages and more.

Will you need a special mortgage to buy the home you want?

Depending on your personal financial situation, and the type of home you want to buy, you may need to apply for a special mortgage in order to be able to buy your house now.

There are several kinds of special mortgages, each designed to help with specific financial and/or personal situations that you may find yourself in:

  • Sub prime mortgages help those with poor credit and/or very little down payment money. FullSpectrum is our recommended sub prime lender.

  • A bi-weekly mortgage is the easiest way to save tens of thousands of dollars on your mortgage and the best thing is, almost everyone can do it. Learn more.

  • Jumbo mortgages is the term used to describe (surprise surprise) extra-large loan amounts (which you need if you want to buy an expensive home.) Learn more.

  • Zero down mortgages are for home-shoppers short on cash. Learn more.

  • Low documentation, or lowdoc mortgages are needed when the applicant is self-employed, is a recent immigrant, or otherwise cannot document her income. Learn more.

  • Express mortgages, offered by prime lenders such as Eloan allow those with good credit and down payment cash to get approved quickly and easily, with a minimum of paperwork. Learn more.

  • Cash saving mortgages are for those willing to take on higher debt in order to avoid extra costs at closing time. Look into them now.

  • No closing cost mortgages can make a home purchase a possibility for those with less cash than necessary. Check out the details now.

A more detailed overview of these and other special mortgages can be found in our in-depth guide to choosing the right mortgage.

So, what happens if you have credit problems, or can't document your income?

Borrowers with a flawed credit history or a small down payment usually need to get a subprime mortgage.

Sub prime mortgages have higher interest rates than prime mortgages and there may be some additional loan origination fees. Lenders use the higher rates and fees to offset the risk of investing in a home buyer with damaged credit or little money down.

Sub prime mortgages, though always more expensive, can still be a pretty good buy under the right circumstances. If the housing market is cheap, or rates are very low, or you've found your dream home, or you're just tired of renting - accepting the extra cost in order to buy right away is worth it.

If rates are high and you don't need to buy right away, spending some time improving your credit or saving for a bigger down payment might be worth the wait. Even a year of responsible credit behavior can help.

A mortgage paid responsibly always improves your credit profile, but we recommend that you obtain a special mortgages designed specifically to repair a poor credit history.

Good sub prime lenders offer mortgage products that allow poor credit borrowers a chance to build a better credit history by beginning the mortgage with a high interest rate and every year working toward a lower one. This allows consumers to buy a home now and not be stuck with exceedingly high payments for the whole life of the loan.

Sidebar
We urge you try our top-rated prime lender, Eloan first, to see if you qualify for a regular mortgage. It won't hurt you to try, and if you do not qualify, FullSpectrum Lending guarantees the lowest sub prime rates in the country so you still have an opportunity to save.

Sub prime mortgages may also require the paying of extra private mortgage insurance, or PMI. PMI is a policy the lender takes out on you, the borrower, to protect them from losing out on their investment if you default on the loan. It doesn't protect you at all, but you have to pay for it which is why it is nice to avoid.

The sub prime lender we recommend, FullSpectrum does not charge for PMI separately, instead the cost is included in the interest rate charged.

While this makes your total interest bill higher, by up to ¾ to 1 percentage points (.75%-1%), interest is tax deductible and PMI is not, so you save that money on deductions.



Next:Bi-weekly mortgages

Get a little financial lesson every week:

Saving on taxes is a year-long process. Start learning how to save year-round by reading our weekly personal finance newsletter, with articles, tips, blog posts, and great deals that will save you money.

Subscribe here: