“Sub-prime” refers to a credit score below the average mortgage taker, indicating that they may be a credit risk.
The interest rate associated with subprime mortgages is usually high to compensate lenders for the risk that the borrower will default on the loan.
These borrowers usually have a credit score below 640 as well as other negative information on their credit reports.
In the 2008 financial crisis, much of the blame was placed on the proliferation of subprime mortgages offered to unqualified buyers in the years before the crash.
New subprime mortgages are subject to restrictions and must be properly signed.