Shop Around Before going Sub-prime
If the first mortgage lender you speak to suggests that you "need" a sub-prime loan to acquire your dream home (or to refinance the one you own) you don't have to take their word for it.

Experts say that as many as 1/3 of people who wind up paying the higher interest rates (and other costs associated with subprime home loans) could have gotten a conventional mortgage loan at a lower rate if they had done some basic comparison shopping before making their loan purchase decision.

The subprime mortgage market "is the fastest growing segment of consumer finance. Between 1994 and 2004 the subprime market grew more than 90 percent. Much of that growth came through aggressive marketing to people refinancing their homes. (continued below)

Homeowners are "spammed" with offers to refinance. Many junk-mail offers come with fake checks made out to the homeowner, and all they have to do is refinance their home to get the real check and mortgage -- often times subprime -- that goes with it.

Many people who fall into the subprime trap have accepted one of these offers without checking to see what other mortgage lenders can do for them.

If you are tempted by one of these subprime mortgage loan offers, shop around first for the lowest total cost loan you can get. Besides looking at the interest rate, look at loan initiation fees, processing charges, and prepayment penalties. Lenders must give you a Good Faith Estimate of all the costs and fees for the loan. Compare it to the Good Faith Estimates from at least two other lenders, before making any decision.