Bad Credit Mortgage Lenders

There are many lenders that are willing to make mortgages available to those who have bad credit.

Lenders are willing to issue mortgages to people with bad credit because a mortgage is a secured loan. In a secured loan, the real estate is used as the collateral for the loan. This makes it profitable for some companies to give mortgages to people with bad credit.

Working with a lender that specializes in bad credit mortgages can help a person get a mortgage. Such lenders will be willing to work with individuals that regular mortgage lenders are unwilling to loan money too.

Where to Find Bad Credit Mortgage Lenders

There are hundreds of bad credit mortgage lenders that operate online. Simply typing the words “bad credit mortgage” into a search engine will produce a list of several dozen lenders. The average person should have no trouble finding a bad credit mortgage lender to work with.

You should examine the websites of bad credit mortgage lenders carefully because not every bad credit mortgage lender operates in every state. Since state laws governing mortgages are different not every mortgage product is available everywhere.

Once you’ve located a bad credit mortgage lender that operates in your area you should look over their site. Then see if they can offer a good deal on bad credit mortgage.

Which Bad Credit Mortgage to Get

The best mortgage deal for the average person is a standard fixed rate mortgage which usually lasts for 30 years. In a fixed rate mortgage the same interest rate is locked in for the life of the mortgage. This is the best deal for most homeowners because the mortgage holder cannot change the payment amounts during the life of the mortgage.

Some bad credit lenders will try to talk you into different kinds of mortgages such as Adjustable Rate Mortgages (ARMS), interest only mortgages and 15 year mortgages. These mortgages are usually bad deals for the homeowners and good deals for the mortgage holders because they make it possible for the mortgage holder to increase interest rates and payments.

Mortgage Insurance

Bad credit mortgage lenders will probably require homeowners to get mortgage insurance or private mortgage insurance (PMI) with their mortgage. This insurance covers the costs the mortgage provider will incur if they have to foreclose on the home. The cost of mortgage insurance is added to mortgage payments so it will increase the cost of the mortgage.

It is possible to forgo PMI if a homebuyer is willing make a down payment equal to 20% of the balance of the mortgage. Homeowners who are willing to make a large down payment should be able to avoid mortgage insurance.

Homeowners will be able to stop making mortgage insurance payments once they have paid 20% of the mortgage balance off. Federal law makes it illegal for mortgage holders to force homeowners who have paid 20% balance off to buy PMI.