What is one consequence of obtaining a subprime mortgage?

Obtaining a subprime mortgage typically results in higher interest rates due to the increased risk associated with lending to borrowers who may have lower credit scores or a less favorable credit history. Lenders adjust interest rates to compensate for the elevated risk of default that comes with subprime lending. When borrowers have a history of late payments, bankruptcies, or other credit issues, the likelihood of potential loss for the lender increases. As a result, these lenders charge higher interest rates to protect their investment and make the loan more profitable, reflecting the additional risk taken on by offering financing to these borrowers. This is an important aspect to understand in mortgage lending, as it directly influences the affordability of a home for those in the subprime category.