The Myth: 

So theres a myth going around that borrowers who qualify for prime loans only end up with subprime loans if lenders deceptively steer them into such loans.

The Truth:

Many borrowers who might qualify for prime loans knowingly select subprime loans for reasons that include:

• A loan to put little or no money down. I always still recommend the government loans which require little money down anyways but for the Jumbo limits and consumers who want to pay zilch, there are the alternative loan options.
• Documentation Purposes to speed up or not disclose to the lender.  Again its the consumer choice they have choice A) secured government loan with a great rate where we need x,y,z documentation and close on x date....or choice B) no doc loan with a higher rate...where we need NO documentation and close faster.  Its like buying a T.V now with the highest msrp and no interest in 6 years or waiting 2 weeks later to buy it on sale without having the no interest promotion.
• And of course taking a higher loan amount than the restricted prime limits.  Recently FHA limits went up but there are still consumers out there who need a higher loan than the FHA limit. So many borrowers again will take a hit on a subprime loan in order to get what they want.

Bottom line there are choices out there and know what they are, make a educated decision on whats the best loan for you. 

This blog is based on the Myth Article located on the Mortgage Bankers Association website http://www.mortgagebankers.org 

I always give my borrowers which choices they have and what are the pro's and con's for each loan type.  I will walk you through the whole loan process so you will never be left in the dark.  Call me to get a free mortgage analysis