Owning home has long been the American dream. However, a complex financial system and strict lending policies make it difficult for many of Americans to achieve that dream. A recent report found a lot of Americans are unable to qualify for a traditional mortgage loan. According to the report, the median credit score for a new mortgage is 756, though the average score is 695. This means only the most qualified borrowers can obtain credit. The total volume of new mortgages fell by $39 billion in the second quarter of 2016, compared to the same time last year.
Subprime lending provides a solution for those who can afford to buy a home, but don’t qualify for a traditional loan. Since the recent housing crisis, banks and credit unions have tightened their lending parameters. So, if you don’t have a high credit score, proof of income, and good collateral, then you can pretty much kiss your chances good-bye.
While there are some opponents of subprime lending, it’s important to understand that the industry as it exists today isn’t as risky as it was in the past. Lenders are more rigorous with their lending policies, though more flexible than bureaucratic banks and credit unions.
Subprime lenders like Athas Capital Group are very beneficial, as they allow people who could well afford a home but don’t receive a corporate paycheck to get a mortgage. Contractors and the self-employed lack a W-2, so banks don’t have concrete proof of their income, which prevents them from passing the underwriting process. With the help of subprime lenders, more Americans can attain the American dream.