Subprime Home Equity Loan: What to Beware Of

Getting a subprime home equity loan is not ideal for anyone. Anytime you deal in the subprime lending market, you know that the conditions are not going to be good. You would be much better off in the traditional mortgage lending market. However, when your credit score forces you into the subprime lending market, you do not really have a choice. Therefore, you need to learn how to deal with things in that market. Here are a few things that you should be aware of in the subprime lending market. 

High Interest Rates

When you are subjected to the subprime lending market, you should know that they are going to charge you high interest rates. They look at you as more of a risk than they would prefer to lend to. Therefore, in order to make up for that risk, they are going to require a higher rate of return. This comes in the form of a higher interest rate for you.

Balloon Loans

A very popular loan that is offered in the subprime market is the balloon loan. With this type of loan, you will make only interest payments on the loan. Then when the loan is over, you have to come up with the entire balance all at once. 

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