A subprime loan typically has a higher interest rate than other loans because the people who need it usually have a poor credit history or very low credit score. These high interest loans do make people pay a lot more for a house they want but actually have some benefits. The bank gave higher interest rate, because they anticipate higher risk from lender.

There are many financial institutions that specifically deal with subprime lenders. This means they know how to help those with poor credit. Some banks also offer prime and subprime mortgages because they know their community well and some areas just don’t have the types of jobs that prime mortgages will need to ensure their monthly payments.

A good benefit of a subprime mortgage is that you don’t have to take the time to raise your credit score. This can take years of payments and credit building and many people just don’t have the time for all of that.  Subprime mortgage is a risky business, and is proven can destroy a country economy like US. Many financial institution in US has serious problem because of subprime mortgage, like Citibank, merrill lynch, AIG, freddie mac, fannie may, lehman brothers, HSBC, and many other more.