Bad Credit Mortgage Companies
There is no quick and easy way to fix bad credit, and
most traditional mortgage companies have fairly stiff
requirements. To qualify for the best rates, an applicant
must have a spotless credit record. However, there are
mortgage companies that specialize in providing mortgage
loans to people with bad credit. These high-risk lenders
do charge higher interest rates and fees.
There are numerous programs that claim to repair credit
files quickly, but these services are often fraudulent,
or offer services that a consumer can easily do for
him or herself. For the most part, credit repair services
dispute as many items on a credit bureau report as possible.
Any item that cannot be verified must be deleted within
30 days. While many items can be deleted in this fashion,
some will reappear later when the creditor does verify
or re-report the item.
The most common type of “bad credit, or “sub-prime”
mortgage lender is one who issues home equity lines
or other types of secured loans. Mortgage companies
are generally more willing to issue a loan if a borrower
has substantial collateral, or a down payment of at
least 20 percent, even if bad credit is a factor. Typically,
the mortgage company will also require the borrower
to have substantial mortgage insurance.
Sub-prime mortgage lenders have an incentive to offer
loans to people with bad credit; because these mortgagers
are more willing to take on risky borrowers, they are
able to charge much higher interest rates, and in the
case of default, the mortgager will take any equity
the borrower has built up. Some predatory mortgage companies
make loans to sub-prime borrowers fully expecting a
high percentage of them to default, for the express
purpose of profiting by repossessing homes and acquiring
equity in this manner.
Borrowers with poor credit will do best first by seeking
to improve their credit as much as possible, and by
comparing the offerings of various sub-prime lenders—and
of course, being exceptionally cautious to avoid scams
and predatory lenders.