What is a sub-prime mortgage lender?

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"I hear terrible things about sub-prime lenders. What are they, and how can I avoid them?" A sub-prime lender is one who lends to borrowers who do not qualify for loans from mainstream lenders. Some are independent, but increasingly they are affiliates of mainstream lenders operating under different names. Sub-prime lenders seldom, if ever, identify themselves as such. The only clear giveaway is their prices, which are uniformly higher than those quoted by mainstream lenders. You do want to avoid them if you can qualify for mainstream financing, and I'll indicate how shortly. The failure to qualify for mainstream financing is due primarily to some combination of four factors: low credit scores; inability to make a large enough down payment; excessively high levels of debt payments relative to income; and inability to document income and assets adequately. None of these deficiencies is likely to disqualify an applicant, but a combination of them will. Other factors that can enter ...