Bad Credit Mortgage Companies

Many people are under the impression that if you have bad credit, you are immediately disqualified from getting a mortgage. Though it is certainly harder to get a mortgage with bad credit, there are some bad credit mortgage companies out there that will take on the risk and help out customers. What you should know about these companies is that you are going to have to pay big for their services. Since they are taking on extra risk, they pay for it by charging higher rates. Customers can take these loans and then refinance later, though. So how can you find the best bad credit mortgage companies?

Using a mortgage broker
When you have bad credit, you must be sure to explore all of your options. One great option for people in this predicament is using a broker. Mortgage brokers not only have information and access to a number of lenders; they also have personal relationships with many lending companies. You can often find brokers locally that specialize in bad credit mortgages, and you can get more information from the National Association of Mortgage Brokers from their website: www.namb.org/.

Though it might seem somewhat counter-intuitive for companies to offer mortgages to people with bad credit, there is a method to their madness. Companies do this in order to compete and gain market share. If they are struggling to attract clients, this can be a way to establish a solid reputation. Likewise, they are able to charge high rates and enforce high fees on people with poor credit, raising the potential profits if the loan stays in good standing. When getting these loans, recognize that you will likely have to pay almost double the average mortgage rate. While others are paying in the 5% range, you can expect to pay close to 10% with most lenders. This can provide some major difficulties, especially on large loans. Still, mortgage brokers will tell you that this is probably the only way to gain financing if you have bad credit.

Considering government options
One of the best bad credit mortgage companies is the federal government, though they are tightening up things, as well. The Federal Housing Administration gives out plenty of loans to people who have less than perfect credit. In an economic climate like today’s where companies are being tight with credit, it can make a lot of sense to work with the FHA on one of their loans. These loans have special conditions that you need to know about, and they are restricted to certain properties. Even with these things in mind, FHA loans can make a lot of sense for people who can’t qualify for a private mortgage.

In order to find out more information about the qualifications and restrictions associated with these loans, visit the FHA’s website at http://www.hud.gov/buying/loans.cfm. Not all people can qualify, but it is a good option for folks who have run into trouble in the past. The nice thing about this bad credit mortgage company is that the rates are typically lower and you won’t run into nearly as many small fees as with private mortgage lenders.

The internet is your friend overall as you look for bad credit mortgage companies. Be real with yourself and understand that you probably won’t get the best deal in the world in the beginning. With that knowledge in mind, it is important to be skeptical over offers that you see online. If a company is offering something that seems too good to be true, then you might be better off looking elsewhere. Be sure to check out the Better Business Bureau and do some hard research on company histories before you commit to anything. With such a large monetary commitment, it is important to make sure everything is in order.