What's with Subprime?

These days a whole lot of "Subprime" is being tossed around. But what exactly uis subprime? Luckily the Mortgage Professor can help...

Subprime Lenders Defined

A sub-prime lender is one who lends to borrowers who do not qualify for loans from mainstream lenders. Some are independent, but increasingly they are affiliates of mainstream lenders operating under different names.

Subprime Borrowers Defined

A subprime borrower is one who cannot qualify for prime financing terms but can qualify for subprime financing terms. The failure to qualify for prime financing is due primarily to low credit scores. A very low score will disqualify. A middling score might or might not, depending mainly on the down payment, the ratio of total expense (including debt payments) to income, and ability to document income and assets.

The article not only defines the terms, but goes into some of the problem with subprime loans. Click here for the whole article...