Subject: The Difference Between Prime and Sub Prime Lenders

There are two different lender markets; the prime and sub prime
lenders.

Unfortunately it is hard to identify these markets from each
other except that sub prime lenders are usually slightly
higher than prime mortgage lenders.

Sub prime lenders usually accept borrowers that prime lenders turn
down.

Some lenders offer both prime and sub prime mortgages and usually
are the borrowers best option because they first try to get the
borrower approved for a prime mortgage before a sub prime
mortgage.

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A sub prime lender bases it's rates similar to that of a prime lender,
in accordance with credit ratings and down payments.

But unlike prime lenders, sub prime lenders are not required to
carry escrows on loans to cover hazard and fire insurance
premiums, mortgage insurance premiums, and property taxes.

Sub prime lenders typically have higher interest rates and fees
because they take on a riskier market. More sub prime loans fall
into default than those of prime loans.

They also have to charge higher fees and interest because more
applications are processed and rejected and marketing costs are
typically higher for sub prime lenders.

Although sub prime lenders benefit borrowers who do not qualify for
prime loans, that can be a disadvantage to borrowers who do
qualify for prime loans. The best way to avoid this is to check with
several lenders.

Don't be so quick to jump on the first one that makes an offer,
especially if they aggressively marketed the loan to you.

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Many sub prime lenders are aware that borrowers qualify for prime
loans, but these lenders work on a commission and will process a
prime borrower for a sub prime loan.

It is up to you, to make sure you don't get the wool pulled over your
eyes and end up paying a higher interest rate on your home
mortgage.

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Thank you,

Max Taylor
http://taylor-marketing.blogspot.com