What is a Sub Prime Home Loan?

Sub Prime home loans target consumers with credit problems and less than perfect credit and even Bad credit. If you are described with one of these types of credit descriptions, you are more than likely to be qualified for a home loan. Sub Prime loans will start you off with low monthly payments and make owning a home affordable.

Why are Sub Prime Home Loans bad?

Sub Prime loans will start you off with a teaser rate below the average market rate for a specified period of time and will increase after the teaser rate period is over. This has caused a major problem because most people have a fixed income and when their payments jump 30 or 40 percent this can be devastating to a homeowner with insufficient income.

The affects Sub Prime Home Loans has taken within the community.

Sub Prime Home Loans have caused a notorious rate of home foreclosures within the US. People are abandoning their homes because they are unable to make mortgage payments. Homes are left empty and left unkempt and causing reduction in home value and empty homes become a haven for drug dealers, prostitution, and a hang out place.

Signs of distress that can cause homeowners over the edge.

32 % Experience Job Loss

25 % Experience a Health Crisis

85 % Have Already Missed One Mortgage Payment

50 % Have Already missed Two Payments

Most have no savings, no available credit, and their extended families have limited resources.

Most have first-time loans, and most loans are less than three years old.

They have already refinance two or three times.

For assistance and questions regarding sub prime home loans please visit:

http://www.hud.gov/offices/fheo/lending/subprime.cfm

http://www.fdic.gov/about/comein/files/foreclosure_statistics.pdf

http://www.fhfb.gov/

Disclaimer

Linh Lai takes full responsibility for the information posted. The information on this page represents that of Linh Lai and not that of California State University Sacramento .