The more serious and longstanding the history of credit problems, the lower the borrower's rank on the alphabetical scale. Individuals and couple denied a prime mortgage should receive a letter from the lender stating the reasons for the denial. If a poor credit history is the reason, buyers need to maintain an excellent record of debt repayment for two years. They can then reapply for a prime mortgage. Good subprime lenders make mortgages available to borrowers with a less than perfect credit history.
Subprime mortgages have higher rates than prime mortgages.
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.