Generally speaking, there are two types of mortgage borrowers: prime and sub prime. Borrowers with good credit scores and a minimal amount of debt that is kept current are considered prime borrowers and they therefore qualify for better rates. If the opposite is true, that is, the borrower has a low credit score, too much debt, and a history of late payments, he will be marked as sub prime. As a rule of thumb, a lender will consider a borrower with a credit score that is less than 660 and more than two payments that have been more than 30 days overdue in the last year, and debt to income ratios of over 50%. Having had a foreclosure or bankruptcy in the prior five years will also designate a borrower as sub prime, even if the above factors are not an issue. Banks base their interest rate on the risk they take on the borrower, so it goes without saying that sub prime borrowers will have a less favorable interest rate – pret hypothecaire. Rising interest rates and falling home prices have combined to contribute to the default on hundreds of thousands of these so-called “sub prime loans”, and now banks are not willing to lend to any except prime borrowers. One of the first steps a potential home loan borrower should take is to shore up his credit rating so that his score will meet the bank’s more stringent criteria. Bringing down the level of debt and being diligent about the payment of bills will show a lender that recent credit history is better. He should also make sure to keep good records and be willing to document all of his recent “good” credit practices. If, however, the borrower is attempting to re-finance a home that has a mortgage that is higher than the value of the home, it is unlikely any lender will be willing to take it as collateral. The first thing anyone in this situation is advised to do is make an appointment with an experienced mortgage broker. Such a broker can find avenues the borrower may not have thought about, as well as advise him in repairing his credit, and what other steps he may have to take to qualify for a loan The other side is that an experienced, reputable consultant will not string a client along-he will tell him if the situation is unworkable. Regrettably, there are brokers who are only interested in getting an application fee, even when there is no chance that a mortgage will be granted.