No longer hiding in the shadows behind other more prominent types of mortgage loans, the non-prime loan market continues to grow at an unprecedented rate. Within the extremely competitive and diverse marketplace, brokers may opt to look towards non-prime loans as interest rates began an upward climb.

Major differences though exist between the non prime and the traditional or prime market. The average non prime borrower is not necessarily an unreliable borrower, simply a person who doesn’t fit the standard credit qualifications.

In fact, according to the National Home Equity Mortgage Association (NHEMA) close to 50 percent of US citizens are categorized as being within the non prime lending arena. Notably, though these nontraditional persons, who combined have a median age of 48 and an income of more than $50,000, do not fit the notion that sub prime lending formerly represented.

Reports from NHEMA, indicate that in 2003, the non-prime industry aided over five million borrowers with more than $250 billion in funding, the equivalent of close to 35 percent of the home financing market.

That is why rather than call it subprime, the modern phrase that has replaced it is non prime. For many “average” persons, some with nontraditional employment, previous health issues, divorce or employment gaps, are now classified as being unqualified to receive a mortgage loan.

So rather than using the term sub prime which connotes below average, non prime simply leaves an impression that one needs something slightly outside the traditional. A much more pleasant label than was formerly in place.

While the non prime sector now houses such a large percentage of the population, the industry has begun to embrace the products geared towards helping these individuals achieve home ownership and | or refurbish their homes.

In light of dramatic developments in US employment and demographic statistics, mortgage companies find the non prime market to be a very valuable area in which they can successfully grow their business. In 2003, non prime lending had increased by over 50 percent from the previous year. Quite interestingly, these loans originated from some of the largest mortgage financiers, bankers and lending institutions in the country.

From these findings, NHEMA determined that lending practices need to remain consistent regardless of whether a prime or non prime product. While it is encouraging to see major lenders offering loan to those outside of the mainstream, it is also necessary to ensure that these somewhat more challenged person to not get bilked in the process.