Subprime mortgages are usually the culprit that gets blamed for the housing bubble burst in the 2000s.

Subprime mortgages are usually the culprit that gets blamed for the housing bubble burst in the 2000s. 

After the #housingbubble burst, it was virtually impossible for someone with a credit score below 640 to obtain a home loan. Potential homeowners had to either build their credit up before they bought a home, find a #renttoownoption #ownerfinancing or were forced to rent a home.

#SubprimeMortgageRequirements Now that the economy is beginning to stabilize, subprime mortgages are making a comeback. This time around, the Consumer Financial Protection Bureau (CFPB) places restrictions on these subprime mortgages.

#Potentialhomebuyers must be given #homebuyer'scounseling by a representative that has been approved by the U.S. Department of Housing and Urban Development. Other restrictions placed on these new subprime mortgages limit interest rate increases and other terms of the subprime mortgage.

Even Wells Fargo has gotten in on the new subprime bandwagon. Wells Fargo is now approving potential home buyers with credit scores as low as 600 for Federal Housing Administration (FHA) loans.
Higher Costs of #SubprimeMortgages
Although subprime mortgages are making a comeback, they are coming at an increased cost. Now, subprime mortgages come with interest rates that can be as high as 8 to 10%, and may require down payments of as much as 25 to 35%.
Defenders of the new subprime mortgages point out that homebuyers are not forced to pay those high percentage rates indefinitely. Once the buyers can prove that they are capable of paying their mortgages on time, their credit scores should increase, and they can refinance their home loans at lower rates.