Question : How do you know whether the bank classes your home loan as a "subprime" loan?
My loan is fixed rate, my monthly payment is fairly low, and I put down a large downpayment. But it was my first home, and I find myself wondering if I had a "bad risk" loan or a normal home loan, after hearing constant talk about "the subprime lending debacle". Any info you can offer will be appreciated.
- asked by Mr. Vincent Van Jessup
All Answers:
Answer #1
If you put a substantial down payment and havedecent credit then chances are real good that youare not in a sub prime loan as these loans aretypically out of the ordinary type loans such asno-doc, stated income or even 100% financing whichI don't even think you can get anymore. When indoubt call your lender and ask.
- answered by rick
Answer #2
I wouldn't worry. The problem with "sub-prime"lending was a large group of individuals with poorcredit, small down payments at adjustable ratesthat reset above ones that they could afford. Itdoesn't sound like you had any of those things soI wouldn't worry.
- answered by lmsgoodgirl
Answer #3
First of all, if you already HAVE your loan thesubprime debacle probably won't affect you. Bankssimply stopped lending to bad credit risks. Also,bad credit risks that they lent to a few years agoare starting to default on their loans and causingrecord foreclosures and declining market prices. BUT if you have a loan, can make the payment, andaren't expecting your payment to skyrocket(adjustable rate, interest only period expiring,etc.) you should be fine. Your loan was possiblya subprime loan if your credit score was below 620and/or you didn't put at least some money downand/or you didn't provide full documentation ofyour income.
- answered by Keep On Trucking
Answer #4
Ok as a broker the lender never classes a propertyas sub prime the lenders fall into 2 catagoriesprime and sub prime, prime lenders are eitherbanks or building societies sub-prime lenders areinstitutions like Southern Pacific Mortgage Ltdetc... your confusion rests with the Northern RockDebacle i would imagine although they are a bankwhat happened in the American Market with lenderslike S.P.M.L. led to a tightening on the amount ofmoney in the market to which lenders can use tooffset the costs involved as Northern Rock foundto there cost the amount of mortgages they hadwritten meant that they were unable to borrowsufficent money to cover them...Now seeing as youtook out a mortgage on a fixed rate it dependswhere you initally went to aquire a mortgage if itwas your bank or building society it wouldnormally be a prime lender if you went to anindependent financial advisor it could be either aprime or sub-prime mortghage the criteria normallywould be on things like income or employmentstatus as to which lender is choosen "bad risk"refers to people who have missed payments on theremortgages or had ccj's ( county court judgements )written against them for defaulting on things suchas secured loans taken against there property,when there fixed period ends on the existingmortgae and they look around to take a newmortgage a bank or building society will not allowthem to take one so therefore they have to go witha sub-prime lender which has different criterianormally allowing for missed payments and/or ccj'sthe interest charged is above what a bank orbuilding society would charge as these clients areclassed as a greater risk ...I would look at theKey Facts Illustration (K.F.I) you recieved whenyou initally took out your mortgage or the formaloffer it will tell you who the mortgage is withthe intital fixed rate the period it is fixed forand the revisionary rate ( rate after fixed ratefinishes ) there are not such things as bad riskloans normally as the industry is regulated by theF.S.A. ( financial services authority and thefinancial ombudsman ) so any advice you were givenif it was incorrect you can go to the websites forboth of these and see your rights ok hope this hasbeen of use to you
- answered by sheev m
Answer #5
If you were dealing with a reputable lender, theywould have mentioned whether or not you would bedoing your loan on "A" paper or "B" paper. B paperis the sub prime market. Fortunately for you, youare intelligent. Home loans are only done a fewtimes in a normal person's life. This makes itdifficult to always know what to do when applyingfor a mortgage. You had the common sense to putout a nice down payment and get a fixed rate.Regardless of whether you are on A or B paper, youhave a good loan. The only problem in the subprime market was minorities with poor credit andno money coupled with under capitalized investors.Neither of these parties had any business buyingthe properties they did. The market always decideswho is worthy. It is not a respecter of persons.Race, creed, color, religion or education do notmean one thing to the market. You are able to payor you aren't, that's all the market cares about.Fair housing laws will never change that.
- answered by kirk m
Answer #6
1. 100% is still available ... Ive bought everysingle house I have ever had with 100% though attimes could have bought with some % down.2. Normal borrowers with good credit will not besubprime unless they were stupid.3. Doing subprimeis for most, a very stupid thing to do.4. I boughtmy house with repo's & bankruptcy at 100%financing and still got a great rate.
- answered by pcreamer2000
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