Ok, so your credit score is kind of low and you're having a tough time finding a bank to lend you money at a reasonable rate. You're looking for the best subprime mortgage lender to get you the best rates.
Even though your credit score is subprime, there are lenders who will still lend or refinance your debt at a competitive rate. You just have to shop around for free online!
Check out Credible online to have lenders compete for your business for free! There's no obligation to go with any of them. Just keep getting competitive quotes to get the best rate possible, especially as mortgage rates have plummeted to all-time lows in 2020.
Credible is the best mortgage subprime lender due to its longevity, healthy balance sheet, proven track record and massive market place.
Best Subprime Mortgage Lender
The great thing about Credible is that you can apply for a no obligation loan online in minutes, and within the hour, you'll get competing banks e-mailing and calling you about their best rates. Then you can pit their offers against each other some more to get the best terms possible!
You, the borrower doesn't pay Credible a penny. It's the banks who pay Credible to compete for your business. As a result, lenders are motivated to try and get you the best loan possible to win your business.
Just a heads up. The celerity of the lenders can be quite surprising to those who are not used to such quick service. Their e-mails and phone calls will die down after several days if you are not interested.
I like to use Credible to get quotes in writing and then bring these quotes to my main bank to get them to match or beat the Credible rate. Using this strategy, I was able to get my bank to refinance my jumbo loan to a 2.75% interest rate from their initial 3.125% offer in 2020.
Related: Credible Review – The Best Subprime Mortgage Lender
Why You Should Refinance Now
COVID-19 has crushed the economy… or at least suppressed it until there is a vaccine. But things are recovering and I'm bullish on rental properties and big city real estate. The economy is recovering in a hurry and inflation is likely picking up.
It behooves you to at least check what the latest rates are if you have not refinanced in the past six months. If you are a new homebuyer or want to refinance, it's important to get as many bids as possible to get the best mortgage rate and terms as possible.
A big part about growing your net worth is doing everything possible to minimize expenses. I believe everybody should at least own their primary residence to get neutral the ever rising property market. Once you own, it's all about lowering your property taxes and getting the best mortgage rate possible.
My Take On Interest Rates
Mortgage rates have been going down for over 35+ years as you can tell by the chart. There is obviously a risk that interest rates will rise at some point in the future, but I'm in the camp that interest rates will stay low for years to come.
Just look at Japan after their real estate bubble burst in the late 1980s. Their interest rates have hovered close to zero for 30 years. Sweden, Australia, and 20+ other countries have zero or negative real interest rates at the moment as well.
I see a scenario where interest rates only inch up by about 2% maximum over the next 20 years. The markets are efficient and global central banks are highly coordinated to tackle inflation.
The Federal Reserve will only raise the Fed Funds rate marginally. Even so, that doesn't mean mortgage rates will go up. Mortgage rates are more tied to the 10-year bond yield, which has been declining since the 1980s.
In a continued low interest rate environment, I prefer taking out a 5/1 ARM amortizing over 30 years. Why pay a higher rate when the average length of homeownership is 10 years? Interest rates are in a structural decline.
You can certainly go for a 30-year fixed loan if you want absolute peace of mind. If you believe interest rates will be aggressively higher in the future, a 30YR could be good. But if the 5/1 ARM mortgage rate is at least 1% cheaper, then I would strongly consider an ARM.
Take the monthly interest savings and save or invest it. There's a interest rate hike cap that's fixed for one year after the fixed adjustment of an ARM is done. There's also a lifetime interest rate cap that's usually no more than 4% – 5% higher than the initial rate. You can always refinance your ARM before the fixed period is over like I've done many times before.
Take Advantage Of Lower Rates
Take advantage of the best subprime mortgage lender, Credible Mortgage. You'll get free, no-obligation real quotes in minutes to help you get a better rate.
I've refinanced three different properties over the past 13 years multiple times, and my combined interest savings a month is roughly $4,000. That adds up to well over $1,000,000 in interest savings over the life of the loans! If you can find a home that's a good deal, you can afford the payments, and plan to stay there for 10+ years, then I would take advantage of record low interest rates and buy property.
Invest In Real Estate
If you're looking to make money in a declining interest rate environment, check out real estate crowdfunding. When interest rates go down, demand for real estate goes up because real estate becomes more affordable.
I've personally invested $810,000 in real estate crowdfunding through a company like Fundrise after selling my expensive SF rental property. Fundrise is the most well-capitalized and most innovative real estate crowdfunding platform today. It is free to sign up and explore.
In an inflationary environment, you want to buy real estate. Inflation acts as a tailwind for real estate prices. Inflation also whittles down the real cost of a mortgage.
About the Author:
Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world. During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate.
In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $300,000 a year in passive income. He spends time playing tennis, hanging out with family, consulting for leading fintech companies and writing online to help others achieve financial freedom.
About Financial Samurai: FinancialSamurai.com was started in 2009 and is one of the most trusted personal finance sites today with over 1 million organic pageviews a month. Financial Samurai has been featured in top publications such as the LA Times, The Chicago Tribune, Bloomberg and The Wall Street Journal.