Sub-prime Mortgage
Definition
- A mortgage granted to a borrower considered sub-prime, that is, a person with a less-than-perfect credit report. Sub-prime borrowers have either missed payments on a debt or have been late with payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may run into trouble or default.
Synonyms
non-prime loan, near-prime mortgage, sub-prime loan, sub-prime lending, non-prime mortgage, near-prime loan
Related Terms and Acronyms
- Bad Credit — Definition,
- Someone who carries a higher credit risk.
- Bad Credit Loan — Definition,
- A loan taken out by someone with bad credit.
- Credit Report (CR) — Acronym, Very Important,
- A report on a loan applicant's willingness and ability to make payments in a timely manner in the past. This report is provided to the bank by an outside agency.
➥ A report that outlines the credit worthiness of an individual or entity. - Debt — Definition,
- Money one person or firm owes to another person or firm.
- Default — Definition,
- When a borrower fails to fulfill the obligations of a loan or lease.
- Delinquent Mortgage — Definition, Important,
- A mortgage loan where the borrower fails to make payments as specified in the loan agreement.
- Mortgage (mtg) — Abbreviation, Important,
- A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
- Mortgage Lender (ML) — Acronym, Very Important,
- A lender that offers mortgages, often through a mortgage broker.
➥ Used internally by mortgage brokers and mortgage lenders. - Predatory Lending (PL) — Acronym, Important,
- Lending practices that are unfair, deceptive or fraudulent.
- Private Lender — Definition,
- A lender not associated with a traditional lender.
- Shared-Appreciation Mortgage (SAM) — Acronym,
- A mortgage loan where the lender or a third-party backer agrees to offer a highly reduced mortgage rate to the borrower in exchange of sharing profits when the property is sold.
- A home loan in which the lender offers a below-market interest rate in exchange for sharing in the profit when the home is sold. Usually done only with private funds/lenders.
- Sub-prime Borrower — Definition,
- A borrower with a less-than-perfect credit report due to late payments or a default on debt payments.
