What is a subprime lender?

Question

I had gotten information about getting a mortage, and someone said try subprime lending if you doing have close to 800 score. What is it?

Answer 1

Sub-prime lenders were the ones who gave out alternative loans for those who could not qualify for a regular loan - they were NOT for people with good credit like you.

If you are approached by a sub-prime lender, assuming any are still in business, RUN - do not walk - RUN away from them as fast as you can!

With a high credit score nearing 800, you can get conventional loans with good interest and lower costs!  If you are a first time home buyer, FHA has a new program that even gives you up to $7500 tax credit (but it is in the form of an interest free loan and would be repaid to the government over 15 years).  

Talk to a GOOD mortgage person - get more than one opinion - having different mortgages access your credit when you are considering buying a home no longer hurts your credit.

You did not mention where you are looking?

Answer 2

If you have a 800 credit score, you want to stay FAR FAR away from a subprime lender.  

A subprime lender is a lender who provides mortgage loans for borrowers with less than perfect credit.  Usually the borrowers will not meet Fannie Mae and Freddie Mac guidelines.  Most subprime lenders are out of business today, so you are going to have trouble finding one.  And if you do find one, you will need at least 20% down, and you will be looking at a double digit interest rate.

Call a local mortgage broker to ask about conventional and FHA financing if you have a 800 score.  FHA loans will be a good alternative if you do have a large down payment.

Answer 3

Subprime lenders are those that lend to people with less than great credit. These are the lenders that are having the majority of foreclosures.

With a score close to 800, you do not need to go to a subprime lender. Any lender would want your business. You have great credit, use that score to negotiate better rates for yourself.