A subprime mortgage was meant to be short-term fix. But borrowers with bad credit and little equity became trapped over time by vicious prepayment penalties. If this describes you, don't lose hope. There's a remedy. Over the past 20 years, I helped many people who lost hope of owning a home because they couldn't meet traditional mortgage guidelines.
Hi, my name is Kate Ford and I'm a retired mortgage broker.
I saw clients, friends and neighbors who could only dream about owning a home become homeowners.
How? Millions of these homeowners with special circumstances were assisted by subprime home loans.
Natasha dreamed of buying a home. But her husband walked out when their baby was 6 months old. Paying off her ex-husband's debt exhausted her savings. Even worse, he'd borrowed using Natasha's name.
Her once perfect credit report reflected only his bad credit record. A subprime loan helped Natasha purchase a home for her baby.
Fred and Josie were young professionals who wanted more than an apartment. As recent college graduates, they had great jobs but no money down. With combined incomes, $1700 a month for their apartment was a snap.
But they wanted to be homeowners, especially before starting a family. Due to a subprime financing, Fred and Josie bought a home with no down payment.
The rising cost of gasoline was affecting Julio's trucking business. When his transport truck broke down, he needed cash quickly to fix his big-rig. Because he was self-employed, debt consolidation loans were too expensive.
Subprime refinancing preserved his future.
Betty anticipated a workman's comp settlement in two years from Jack's accident. But his doctors wouldn't wait that long for payment. She felt hopeless when their health insurance passed on a $65,000 co-payment.
How would Betty, now recent retired, manage her husband's surgical bills and still keep their home where they had raised their children? A subprime mortgage helped her stop mortgage foreclosure.
The subprime mortgage was intended to be temporary. That's why I called it the Band-Aid Mortgage. It was a short-term remedy of the mortgage industry for people with no money down or bad credit. But to people previously denied mortgage credit, a subprime mortgage seemed like a dream come true.
Although many borrowers were helped with subprime home loans, few received a 30 year fixed rate mortgage. Most didn't plan for soaring payments in 2 to 3 years. Left without a long-term solution, homeowners felt helpless when their adjustable rate mortgage skyrocketed.
The riskiest feature of subprime lending was the prepayment penalty. Lenders imposed prepayment penalty periods up to 5 years. This complicated the homeowner's plight when their payments increased. If they refinanced or sold a home, thousands of dollars due to the prepayment penalty drained any equity which homeowners had been lucky enough to gain.
Then real estate values began to decline. It seemed the most recent housing bubble was drawing to a close. Subprime lenders showed signs of cold feet. Liberal mortgage guidelines evaporated almost overnight. Lenders became reluctant to refinance anyone with this type of mortgage.
In the spring of 2007, Ben S. Bernanke of the Federal Reserve Board cautioned don't throw out the proverbial baby with the bathwater.
In spite of Bernanke's announcement, subprime lending continued to decline making mortgage refinancing even more difficult for subprime mortgage borrowers.
If this scenario sounds bleak, don't get discouraged. Take heart! You're in luck because I am about to share how I helped my clients develop a lasting solution to subprime mortgages.
Don't delay! If you follow my plan, The Powerful Cure To Subprime Mortgages, you are on your way to discovering a great long-term solution every homeowner needs.
You'll also find a wealth of information at Kate's Mortgage Blog packed with the latest additions to this website, interest rate updates and a fresh approach to mortgage loans.
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