Once you have your score in hand, you know what kind of deal you can get. People with scores of 660 and up can get the best rate available. So can most people who score as low as 620, says E-Loan's CEO, Chris Larsen. If you score 620 or higher, you should always apply first at a traditional bank or a mortgage bank that does prime lending. Larsen calls it abusive for subprime lenders to foist high-rate mortgages on people who could qualify for standard rates.
Subprime lending helps create homeowners.
A predatory lender looks for people with financial problems who have a lot of equity in their homes. That includes many older people. You'll get a phone call or a letter in the mail, promising low interest rates. The salesperson's job is to hide the loan's true cost. You might be charged a 15 percent to 20 percent upfront fee, which is added to the loan itself.