Refinance Mortgage Rates: Details
According to Wikipedia:
America has the most open credit market in the world (followed by Great Britain) because of innovations such as junk bonds and subprime mortgages.
With the easing of usury laws, there evolved a big market for lending to risky types.
In the third quarter of 2007, subprime ARMs only represented 6.8% of the mortgages outstanding in the US, yet they represented 43.0% of the foreclosures started. Subprime fixed mortgages represented 6.3% of outstanding loans and 12.0% of the foreclosures started in the same period.[4]
The American Dialect Society designated the word “subprime” as the 2007 Word of the year on January 04, 2008. [5]
Roland Arnall was often called the godfather of subprime.
A billionaire, he owned ACC Capital Holdings, which is the parent company of Ameriquest.
Ameriquest was one of America’s most aggressive subprime lenders. In early 2006, the company went public with a $325 million settlement with state attorneys general and law enforcement agencies and financial regulators in 49 states and the District of Columbia. What was up? Allegations of predatory lending practices. Ameriquest was charged with misleading and overcharging borrowers. Another charge was falsified loan applications.
Fannie Mae has lending guidelines for what it considers to be “prime” borrowers on conforming mortgage loans – those loans they will buy or securitize into the credit market. Their standard provides a good comparison between those who are eligible for prime vs. subprime loans. Eligible borrowers for prime loans have a credit score above 620 (credit scores are between 350 and 850 with a median in the U.S. of 678 and a mean of 723), a debt-to-income ratio (DTI) no greater than 75% (meaning that no more than 55% of net income pays for housing and other debt), and a combined loan to value ratio of 90%, meaning that the borrower is paying a 10% downpayment.
Subprime can offer an opportunity for borrowers with an allegedly less than ideal credit record to gain access to credit. Borrowers may use this credit to purchase homes, or in the case of a cash out refinance, finance other forms of spending such as purchasing a car, paying for living expenses, remodeling a home, or even paying down on a high interest credit card. However, due to the risk profile of the subprime borrower, this access to credit comes at the price of higher interest rates, increased fees and other increased costs. Some of these costs are often hidden to the borrower.
http://www.revver.com/video/789221/subprime-lenders/
Generally, the credit profile keeping a borrower out of a prime loan may include one or more of the following:
* Two or more loan payments paid past 30 days due in the last 12 months, or one or more loan payments paid past 90 days due the last 36 months;
* Judgment, foreclosure, repossession, or non-payment of a loan in the past;
* Bankruptcy in the last 7 years;
* Relatively high default probability as evidenced by, for example, a credit score (FICO) of less than 620 (depending on the product/collateral), or other bureau or proprietary scores with an equivalent default probability likelihood.
* Accuracy of the credit line data obtained by the underwriter.
Originally posted 2008-04-20 04:42:01.
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This has been known for a long time. Even if a minority qualified for a prime rate, they were offered sub prime. More money to be made in interest off sub prime loans.
You have an outstanding credit score – congratulations.
You need to do any actions – just keep doing whatever doing, obviously working fantastic.
Subprime lenders are those who lend to people with less-than-perfect credit. You need one of those – they charge higher interest rates, etc.
You definitely do NOT need an instalment loan – that would only be if you actually needed the money and afford to pay it back right away – you sound like you have good control over your finances.
Just go to your bank (BoA is NOT a subprime lender!) and ask them for a [...]