Subprime Mortgage Loan
A subprime mortgage loan is a type of loan offered to borrowers with a less than perfect credit score. These loans typically come with higher interest rates and fees than conventional loans, making them more expensive for borrowers. Subprime mortgage loans are often used by borrowers who have difficulty qualifying for a traditional loan due to their credit history.
History of Subprime Mortgage Loans
Subprime mortgage loans have been around since the early 2000s. They were initially created to help borrowers with poor credit scores access the housing market. As the housing market boomed, lenders began to offer more subprime loans to borrowers with less than perfect credit. This led to an increase in defaults and foreclosures, which ultimately caused the housing market to crash in 2008.
Since then, lenders have become more cautious when offering subprime mortgage loans. They now require borrowers to have a higher credit score and more money saved for a down payment. Additionally, lenders have tightened their lending standards, making it more difficult for borrowers to qualify for a subprime loan.
Table of Comparisons
| Type of Loan | Interest Rate | Down Payment |
|---|---|---|
| Conventional Loan | 3.5% | 20% |
| Subprime Mortgage Loan | 7.5% | 10% |
Summary
Subprime mortgage loans are a type of loan offered to borrowers with a less than perfect credit score. These loans typically come with higher interest rates and fees than conventional loans, making them more expensive for borrowers. Subprime mortgage loans are often used by borrowers who have difficulty qualifying for a traditional loan due to their credit history. For more information about subprime mortgage loans, you can visit websites such as Bankrate.com, NerdWallet.com, and Investopedia.com.
See Also
- Mortgage Loan
- FHA Loan
- VA Loan
- Adjustable Rate Mortgage
- Fixed Rate Mortgage
- Interest Rate
- Credit Score
- Down Payment
- Foreclosure
- Default
