Homebuyers with subprime mortgages can maintain a good credit record for two years and try to refinance with a prime mortgage. For a fee, mortgage brokers take applications and search for mortgages for potential home buyers. Some mortgage brokers identify lenders with relaxed underwriting or approval guidelines for individuals who have been denied prime mortgages. A mortgage broker may provide a valuable service for consumers who do not have the time or expertise to search for a subprime loan. Unscrupulous mortgage brokers may steer consumers toward predatory lenders.
Predatory lending is an abuse of subprime lending.
It encourages individuals to accept additional debt and excessive fees that can lead to foreclosure and financial ruin. A large number of foreclosures in neighborhoods with a high proportion of targeted households also result in the decline of neighborhoods that offer affordable homeownership. Maintain a prime load and avoid refinancing with subprime financing. If denied a prime mortgage or loan, ask why. When a positive credit history is achieved, reapply for a prime mortgage.