subprime mortgages
Subprime mortgages are loans offered to borrowers with lower credit ratings, making them riskier for lenders. These borrowers may have a history of late payments or high debt levels, which makes it harder for them to qualify for standard loans. To compensate for this risk, subprime mortgages often come with higher interest rates. While they can provide access to homeownership for those who might not qualify for traditional mortgages, they also carry the potential for financial strain and increased likelihood of default, as seen during the 2008 financial crisis.
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Subprime mortgages are loans extended to borrowers with poor credit histories or limited financial means. These individuals may struggle to qualify for standard mortgages, so lenders offer subprime options, often with higher interest rates to compensate for the increased risk of default. While these loans can help people buy homes who otherwise couldn't, they often come with unfavorable terms, making repayment challenging. The subprime mortgage crisis of 2007-2008 highlighted the dangers of these loans, leading to widespread defaults and significant impacts on the economy.