Bad Credit Mortgage Lender- What
To Look For
If you have less than perfect credit and are looking to get
approved for a mortgage loan, be careful not to
make some common, costly mistakes. When dealing
with sub-prime mortgage lenders or bad credit
mortgage lenders, many people are taken
advantage of because of their eagerness to get
approved. Choosing and settling on a mortgage
lender or mortgage broker is a very important
decision. Make sure you don't make mistakes that
you will regret later.
Ask yourself, the mortgage broker or lender
these questions before you sign on the dotted
line:
1. Is there a pre-payment penalty on the loan?
Ask about this as soon as you are told you are
approved. A 6 month pre-payment penalty is
probably ok, but 1 year, or two years? Over 1
year is too long. Find out how much the
pre-payment penalty is. Maybe its not much. But
if there is one, its most likely to be so much,
that it would defeat the purpose of refinancing
the loan before the penalty time is up. If you
are get a mortgage loan with a poor credit
score, and then make your mortgage payments on
time, you are likely to be able to refinance in
6 months to 1 year for a much better interest
rate. You don't want to hurt your chances of
doing that with a heavy pre-payment penalty.
Sometimes brokers will neglect to tell you about
one.
2. What will the interest rate be? Sounds
obvious, but lock down exact numbers. Don't
settle for vague answers on this. Brokers may
promise you a low interest rate, but as it gets
closer, end up locking you in at a much higher
rate. If you are doing a combo loan, 80/20, the
second mortgage may end up being the one that
has an interest rate that surprisingly jumps up
as it gets close to the loan closing. Try to
negotiate a lower interest rate, especially if
you are going through a mortgage broker, they
will usually have some play in this area.
3. Is my mortgage broker being too pushy? If you
feel your broker is being too pushy, there may
be something in the loan that is not in your
best interest. Ask a lot of questions and don't
be afraid to start searching elsewhere. When
getting a mortgage loan, you don't want to be in
too big a hurry.
4. Can I afford the payment even I am not able
to refinance for a lower rate within 2-3 years?
Many people get into a sub-prime mortgage loan
with a higher interest rate, just because they
are happy to get approved, only to feel
suffocated later, when they cannot refinance and
get out from under the high payment. If you
don't think you could make the payment for at
least the next 2-3 years with no problem, then
you shouldn't be getting into the loan.
5. What are my closing costs going to be,
exactly? Bad credit mortgage lenders and
mortgage brokers know that the person they are
extending the loan to doesn't have as many
options. These lenders and brokers can sometimes
take advantage of that fact by upping the fees
at closing. Make sure you see what all of your
fees are going to be in writing before you
commit to the loan. Compare those fees with
other lenders and make sure they are comparable.
If there are a little high, try negotiating with
your mortgage lender or broker. They will
usually be able to make changes there if they
choose to.
It helps to choose a sub-prime mortgage lender
based on a referral, one who has a good
reputation. Choose a company with a long
standing reputation and make sure you feel
comfortable working with them.
This article is the property of
www.1st-in-homeloans.com, which has been
offering home mortgage services since 2002. To
find out more visit
www.1st-in-homeloans.com
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