The Fate of the Subprime Mortgage

Published by julia | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate, Shout Outs, Uncategorized

This country went through a crisis with lenders and subprime mortgage loans. What does this mean for borrowers? Mortgage lenders are beginning to tighten standards for loans to the bottom fifteen percent of borrowers. This fifteen percent represents the borrowers who have the worst credit.

If even you are a borrower with bad credit, there are still lenders out there willing to give you a shot, but the rates quotes from as early as February will probably not be a factor, and the new quotes will be higher. Most people will not have to worry about this though. This only affects people with poor credit histories that want to refinance with less than five or ten percent equity in their homes. People who don’t want to verify income or assets will also find difficulty in finding loans.

The reason there are stricter lending standards is because of the subprime mortgage meltdown. The least creditworthy people (about fifteen percent) are borrowers in the subprime category. Anyone with a credit score higher than 620 is still in the clear, and will probably not have problems securing loans and verifying assets.

The biggest problem in this whole subprime mess is the fact that many subprime lenders have went out of business in the past few months because they approved more loans for borrowers who were a risky investment and those borrowers began missing the first, second, and third house payments. Investors urged lenders to buy back loans, but the lenders did not have the money to do so.

But if you are not a high risk borrower, you have little to worry about when securing a loan. If you make sure that you are getting a good rate, and know you can pay your payments, you will be on your way to owning a new home.