There has been a lot of talk in the news

There has been a lot of talk in the news lately about sub-prime mortgages, the credit crisis, and a possible recession caused by these issues.? For those who don't work Coach Sunglasses in the real estate, banking, or mortgage industries, are wondering just what is meant by all these different issues and how exactly they're related, we can help.? There is a very simple explanation as to what sub-prime mortgages are, how they led to the current credit crisis, and how this situation is affecting the U.S. economy overall.

The term "sub-prime mortgages" applies to those mortgages that were approved for those whom many banks would have turned down.? This may include those with a spotty credit history or who earned less than most banks would think is the minimum salary requirement to be eligible for a mortgage.?Arnette Sunglasses,  Some years back, many smaller mortgage companies sprang up with more relaxed requirements for those applying for mortgages, and the term sub-prime mortgages began to be used for these applicants.

Normally mortgages rates are based on the prime rate which is determined by the federal government.?? A percentage point or two is added to the interest rate for standard mortgages for the lending companies’ profit margin.? This mortgage interest rate could increase or decrease over the life of the loan based on the prime interest rate fluctuation (variable mortgages) or the mortgage interest rate could be Oakley Sunglasses Cheap,  locked in as a specific rate (fixed mortgages).