The title could be misleading especially when you are the person on the other side of the table who is suffering from high mortgage interest rates because of subprime loan crisis. However, for people who are having a good credit score and excess income, subprime crisis could be a big opportunity to invest in good properties which are located in prime areas.

Subprime mortgage crisis started when many mortgages were given with adjustable interest rate mortgages to mainly poor credit score customers and poor income documentations. As the mortgage rates increased, many of these borrowers fail to pay the higher monthly repayment. When the borrowers fail to repay their loans, many of these properties were being seized and the rippling effects to the market cause the beginning of the crisis.

Now how could it be good for some people with cash? The answer is by investing into these properties. Once the original borrows could not pay up their repayment, foreclosure action will be taken by the financiers. This means the properties will be out for auction or in foreclosure list at much more lower price than its market price. Potential buyer who have the cash or in the category of A-paper borrower who normally has credit score above 650 could easily secure a loan, and secure these foreclosure properties for themselves.

Once the market corrected itself from this subprime crisis, there will be demand for these properties again. This is when one could cash in from this investment since the house equity will be much higher than the loan amount. Foreclosure properties could be bought at much more lower price than the market price and sometimes could go lesser than 50% of its market value. Foreclosure property also could be bought for own occupancy if one decides to use it for their own resident.