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The term subprime refers to the credit quality of particular borrowers, who have weakened credit histories and a greater risk of loan default than prime borrowers. [5] As people become economically active, records are created relating to their borrowing, earning, and lending histories.
Subprime loans have a higher risk of default than loans to prime borrowers. [108] If a borrower is delinquent in making timely mortgage payments to the loan servicer (a bank or other financial firm), the lender may take possession of the property, in a process called foreclosure .
Other options you might want to consider besides a subprime home loan include: FHA loans – If your credit score is at least 580, consider an FHA loan with a down payment of 3.5 percent. If your ...
The value of U.S. subprime mortgages was estimated at $1.3 trillion as of March 2007, [18] with over 7.5 million first-lien subprime mortgages outstanding. [19] Approximately 16% of subprime loans with adjustable rate mortgages (ARM) were 90-days delinquent or in foreclosure proceedings as of October 2007, roughly triple the rate of 2005. [20]
With more than $1 trillion in student loans outstanding, many students and graduates are struggling under the weight of huge amounts of debt. But as a report from the Consumer Financial Protection ...
One study, by a legal firm which counsels financial services entities on Community Reinvestment Act compliance, found that CRA-covered institutions were less likely to make subprime loans (only 20–25% of all subprime loans), and when they did the interest rates were lower. The banks were half as likely to resell the loans to other parties. [114]
For example, a customer could refinance $10,000 worth of auto loan debt at 7 percent interest into a home equity loan at 18 percent interest. Because the auto loan would have to be paid off in 5 years while the home equity loan would have a 20-year repayment plan, the required monthly payments for the customer would be lower even though the ...
You have fewer refinancing options if your loan is underwater, but you might not be totally out of luck. Talk to a few mortgage refinance lenders to see what, if anything, you can do to refi your ...