What are subprime loans?

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What are subprime loans?

Subprime mortgages are made to borrowers, usually at a higher interest rate, who do not meet traditional credit criteria or who have unconventional borrowing needs.

Factors that can prevent someone from meeting the traditional criteria could be a high debt-to-income ratio, low reserves at settlement, as well as past credit woes – bankruptcies, defaults, foreclosures, or chronic late payments on debt obligations.

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