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.