BluefoxToday blog : Subprime home loans have many users

The word subprime mortgage has lately been one of the most used words in national headlines. To a point that you get vertigo seeing it. It has been featured in the print media, on the Internet, on TV, across the lips of consumers, on talk shows, just about everywhere. It has become a revered celebrity. Unfortunately most of that celebrity flavor has been negative because the media has largely highlighted borrowers who have had a less than stellar credit history, to put it mildly. The ones who have been foreclosed on or will potentially face it down the road.

Yet, on closer look, the subprime borrower comes from a much wider audience than that. And, according to the latest figures from the MBA, or Mortgage Bankers Association, 78% of these loans actually are current, which is a pretty nice share of the total. Let's now go over some of the other, less publicized categories under that banner.

First-time buyers often don't have enough credit background or down payment to qualify for anything but the subprime product. Even their employment history could be too short. This group accounts for about a third of them, reports the MBA.

Second/ vacation home buyers and investors form an important, but much smaller contingency. They could readily be classified as borrowers in good standing, yet had to use the subprime route to get financing for this type of purchase. 

Up-and-comers are those who decided to sign up for subprimes, are diligently working to improve their credit scores by making timely payments and when there, will refinance to a lower-rate prime mortgage. They did have a prior stain they are now determined to fix up.

Ex-primes are the ones with one-time solid credentials but went through life-changing events that at least temporarily thrashed their credit. It could mean a loss of a job, a serious illness or a hostile divorce. One missed mortgage payment in a year can drop your credit score up 160 points, says Experian. That's huge.

As you can see, subprime has a much wider, more credit-worthy appeal than what is normally perceived.