SUBPRIME lenders are willing to take a bit more risk, and GENERALLY (there are ALWAYS exceptions) prime lenders wanted a minimum mid-score of 620…
If you were 619 or below, you were usually subprime.
It all starts with your credit score…
For various reasons, even people with 700+ scores sometimes cannot get a prime lender loan.
Lending is based on rask & reward to the lender, based on their rules. You don’t explain away a 540 credit score.
The ignorance of the media and general comments made about subprime do nothing to explain the realities, and until the implosion, most people didn’t even know that subprime existed,and still don’t know what it really is.
The BIGGEST difference between Prime and Subprime is Prepayment Penalties. Subprime loans come with them, and will cost you to not have them.
Prime loans don’t come with them, but may save you money if you take one.
Once a loan is funded, the terms stay what they are, regardless of who buys it or does the servicing.
A loan is a loan.
You are correct, the borrower is considered subprime, and get loans from subprime lenders.
A subprime loan isn’t a “junk bond” to the borrower, but it could be viewed as one to the investor.
