2007-08-31 04:59:21 · 6 answers · asked by Tenretni 2 in Business & Finance ➔ Renting & Real Estate
Typically given to someone who wouldn't have qualified otherwise or couldn't make the regular payment. They can get a lower payment for 2-4 years then the payment goes up based on the intrest structure. Most people don't think of that and then get used to the lower payment and can't make that bigger payment down the road. They are considered non-traditional loans.
2007-08-31 05:20:43 · answer #1 · answered by VAgirl 5 · 0⤊ 0⤋
A subprime mortgage is any mortgage given to a borrower who's credit or income does not meet standard FNMA guidelines of what a low-risk borrower should be.
Examples of what would make you subprime:
Poor Credit Score
No Income Documentation
Bad Mortgage Payment History
In short, anyone who should have never gotten a loan in the first place. This is pretty much why the market is in the state it's in right now.
2007-08-31 12:10:05 · answer #2 · answered by loancareer 3 · 2⤊ 0⤋
loancareer is correct, but I will also add that the way the loan is structured can make a deal sub-prime as well. Before the Alt-A and conforming lenders came out with 100% loan programs, sub-prime was an outlet for people who had good credit and income, but needed a loan structure that was not readily available through normal financing outlets.
The sub-prime industry snatched up a lot of borrowers who otherwise would have utilized FHA financing. They are not bad risk borrowers, but Loan Officers became lazy and used sub-prime programs simply because they didn't want to, or didn't know how to use FHA.
Yes, there are many homeowners currently who should have never been given a loan, but there are also good borrowers who just needed a 2nd chance, but should have gone FHA.
2007-08-31 12:19:48 · answer #3 · answered by Mortgagemom 3 · 1⤊ 0⤋
typically sub prime borrower
500- 620 fico score range
maybe able to document income, but are programs in case you cannot
loan has a Pre payment penalty
consumer credit derog's and possible BK's or F/C within the last three years where as your typical loan through fannie or freddie needs to document income needs to have a lower Loan to value ( usually ) and no BK's within the last 36 months.
typical A paper borrower is around 620+ fico 80% loan to value Debt to income ratio is low. really no credit derogs within the last 3 years 1to 2 with a good explanation
2007-08-31 12:34:05 · answer #4 · answered by Boston George 3 · 0⤊ 0⤋
It is a loan with a higher interest rate etc.... it is generally offered to clients with less than perfect credit etc..
2007-08-31 12:12:43 · answer #5 · answered by Beatrice C 6 · 0⤊ 0⤋
Someone with poor credit.
2007-08-31 12:15:00 · answer #6 · answered by Bostonian In MO 7 · 0⤊ 0⤋