How do you know whether the bank classes your home loan as a “subprime” loan?
Home Mortgage
Mr. Vincent Van Jessup asked:
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.
Yolanda
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.
Yolanda
March 30th, 2009 at 9:46 pm
Joe
If you put a substantial down payment and have decent credit then chances are real good that you are not in a sub prime loan as these loans are typically out of the ordinary type loans such as no-doc, stated income or even 100% financing which I don’t even think you can get anymore. When in doubt call your lender and ask.
April 3rd, 2009 at 5:51 am
Joe
I wouldn’t worry. The problem with “sub-prime” lending was a large group of individuals with poor credit, small down payments at adjustable rates that reset above ones that they could afford. It doesn’t sound like you had any of those things so I wouldn’t worry.
April 4th, 2009 at 3:43 am
Antonio
First of all, if you already HAVE your loan the subprime debacle probably won’t affect you. Banks simply stopped lending to bad credit risks. Also, bad credit risks that they lent to a few years ago are starting to default on their loans and causing record foreclosures and declining market prices. BUT if you have a loan, can make the payment, and aren’t expecting your payment to skyrocket (adjustable rate, interest only period expiring, etc.) you should be fine.
Your loan was possibly a subprime loan if your credit score was below 620 and/or you didn’t put at least some money down and/or you didn’t provide full documentation of your income.
April 6th, 2009 at 3:55 am
Bill
Ok as a broker the lender never classes a property as sub prime the lenders fall into 2 catagories prime and sub prime, prime lenders are either banks or building societies sub-prime lenders are institutions like Southern Pacific Mortgage Ltd etc… your confusion rests with the Northern Rock Debacle i would imagine although they are a bank what happened in the American Market with lenders like S.P.M.L. led to a tightening on the amount of money in the market to which lenders can use to offset the costs involved as Northern Rock found to there cost the amount of mortgages they had written meant that they were unable to borrow sufficent money to cover them…
Now seeing as you took out a mortgage on a fixed rate it depends where you initally went to aquire a mortgage if it was your bank or building society it would normally be a prime lender if you went to an independent financial advisor it could be either a prime or sub-prime mortghage the criteria normally would be on things like income or employment status as to which lender is choosen “bad risk” refers to people who have missed payments on there mortgages or had ccj’s ( county court judgements ) written against them for defaulting on things such as secured loans taken against there property, when there fixed period ends on the existing mortgae and they look around to take a new mortgage a bank or building society will not allow them to take one so therefore they have to go with a sub-prime lender which has different criteria normally allowing for missed payments and/or ccj’s the interest charged is above what a bank or building society would charge as these clients are classed as a greater risk …
I would look at the Key Facts Illustration (K.F.I) you recieved when you initally took out your mortgage or the formal offer it will tell you who the mortgage is with the intital fixed rate the period it is fixed for and the revisionary rate ( rate after fixed rate finishes ) there are not such things as bad risk loans normally as the industry is regulated by the F.S.A. ( financial services authority and the financial ombudsman ) so any advice you were given if it was incorrect you can go to the websites for both of these and see your rights ok hope this has been of use to you
April 9th, 2009 at 2:57 am
Kathryn
If you were dealing with a reputable lender, they would have mentioned whether or not you would be doing your loan on “A” paper or “B” paper. B paper is the sub prime market. Fortunately for you, you are intelligent. Home loans are only done a few times in a normal person’s life. This makes it difficult to always know what to do when applying for a mortgage. You had the common sense to put out a nice down payment and get a fixed rate. Regardless of whether you are on A or B paper, you have a good loan. The only problem in the sub prime market was minorities with poor credit and no money coupled with under capitalized investors. Neither of these parties had any business buying the properties they did. The market always decides who is worthy. It is not a respecter of persons. Race, creed, color, religion or education do not mean one thing to the market. You are able to pay or you aren’t, that’s all the market cares about. Fair housing laws will never change that.
April 11th, 2009 at 12:55 pm
Ronald
1. 100% is still available … Ive bought every single house I have ever had with 100% though at times could have bought with some % down.
2. Normal borrowers with good credit will not be subprime unless they were stupid.
3. Doing subprime is for most, a very stupid thing to do.
4. I bought my house with repo’s & bankruptcy at 100% financing and still got a great rate.