What is subprime mortgage lending?


Subprime mortgage lending constitutes lending at higher rates. While prime loans target high credit score borrowers and allow favorable rates and terms, subprime loan lending targets borrowers with bad credit and in bad financial situation. Those borrowers are considered high risk, hence the higher rates.

Subprime mortgage lending is often associated with predatory lending practices. While many borrowers would benefit from subprime loans, there are some who couldn't handle subprime loan payments. Subprime lending is considered high risk for lenders, as well.

However, there is a lot of heated argument about the pros and cons of subprime mortgage lending. While on one hand subprime home loans provide funds to people who wouldn't have access to the mortgage market through prime rate loans, subprime mortgage lenders have been charged with accusation on race discrimination and deliberately leading borrowers to default and foreclosure.

Subprime borrowers' profile shows a FICO score of 620 and less, a recent bankruptcy or foreclosure, and/or several payments more than 30 days late.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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