Bad Credit Mortgage Loans: 3 Tips to Help You Save With a Subprime Mortgage Lender

Subprime mortgage lenders specialize in mortgage loans for homeowners with poor credit ratings. If you have less than perfect credit and are unable to secure financing from a traditional mortgage lender, the subprime mortgage market could be your answer. Just because you have poor credit doesnt mean you have to pay excessive fees to qualify for your mortgage; in fact, homeowners with poor credit who research mortgage lenders often qualify for better loans than homeowners with good credit who neglect to do their homework. Here are three tips to help you find competitive mortgage rates and terms when taking out a bad credit mortgage loan.

I. Comparison Shop For The Most Competitive Mortgage Rates

Bad credit mortgage loans are an extremely competitive business; homeowners who use this competition to their advantage can find extremely competitive loan offers in spite of their poor credit ratings. In order to do this it is important to understand how lenders quote you an interest rate and how your Mortgage Company or broker marks up your mortgage rate to make a profit.

Youre already paying origination fees to the Mortgage Company or broker for arranging your loan; however, just because you have poor credit is no excuse for your broker to line their pockets at your expense. Tell your loan representative that you will pay a reasonable origination fee for their services but will not pay any markup of the mortgage interest rate by their company. This markup is called Yield Spread Premium and is how most homeowners overpay for their mortgage loans.

Just be upfront with your loan representative about your credit. Youre going to pay a higher interest rate than most homeowners with good credit; however, if you can find a mortgage company or broke willing to work with you without adding Yield Spread Premium youll save yourself thousands of dollars in finance charges. Avoiding this retail markup of your mortgage interest rate has to be your number one priority for this bad credit mortgage loan.

II. Watch Out For Mortgage Prepayment Penalties

Once youve found a decent mortgage offer, you need to make sure it does not come with a prepayment penalty, or has a penalty that expires after two years. Once you have built up your credit you will want to refinance your subprime mortgage with a traditional mortgage loan. In as little as two years of on-time mortgage payments and the responsible use of credit you will qualify for much better interest rates. Accepting a mortgage with a hefty prepayment penalty could be a barrier to refinancing again when you are able. Try negotiating with your loan representative to have this penalty removed from your loan contract or shortened to less than two years.

III. Be Honest About Your Income, Debts, & Credit

Exaggerating about your financial situation or the state of your credit will only waste your time with honest mortgage lenders and could lead to severe financial problems with dishonest mortgage companies. If a loan representative encourages you to exaggerate your income on an application for sign blank or incomplete documents, this is the sign of a dishonest mortgage company. Taking out a mortgage from a lender like this could lead to severe financial problems down the road, even the loss of your home.

You can learn more about your bad credit mortgage options, including costly mistakes to avoid with a free, six-part video tutorial.

To get your FREE six-part Mortgage Refinancing Tutorial, visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free video tutorial: "Mortgage Refinancing - What You Need to Know," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.

Claim your free mortgage refinancing tutorial today at: http://www.refiadvisor.com

Bad Credit Mortgage Loan

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