Seems as of lately, everyone wants to buy a home. And the most convenient way to do this in a ?rush, rush world? like today, is by applying for a mortgage loan. Let's face it: the mortgage business is booming right now. There are hundreds, if not thousands, of brokers trying to lure you in. As a result, you have to keep careful, you have to watch out for crooked mortgage companies. These companies are out there, so don't fool yourself into thinking otherwise. These companies don't care if you lose your home, your savings, or even if you go bankrupt. Companies like these especially like to prey on the first time home buyer.
So, be forewarned! These companies are looking out for themselves, not you. When you start your hunt for a mortgage, make sure you don't fall into their traps, no matter how seductive their deals may sound.
Here are a few tips to help you determine whether the company you are dealing with is legitimate:
1. Beware if the lender doesn't give you a good faith estimate of what the closing cost will be. Under The Real Estates Settlement Act, a mortgage broker must provide you with this information within three days once you have applied for a loan. An honest lender will give this to you without a problem, as there is nothing to hide. Some of the better brokers will even give you a good faith estimate on your pre?qualifying information. Also, watch out for any company that won't give you information up front, such as interest rate and other fees.
2. Beware if the lender says it is ok for you to lie about any information, especially about your income, to increase your chances of approval. Any sort of lying on any loan form is classified as fraud and is a criminal act. If a broker is encouraging you to do such a thing, use your common sense. If the broker gives you the leeway to do it, then they will probably have no problem committing fraudulent acts upon you. Of course, there are exceptions to the rule. Just make sure to ask about this should the situation arise.
3. Beware of interest rates that are amazingly low or incredibly high. Low interest rates can be very tempting, especially when they beat everyone else by two or three percent. You may think that this will save you money, but in the long run, it will only cost you more, since most loans with significantly lower interest rates tend to increase dramatically throughout the lifetime of the loan. People with a less than perfect credit rating usually fall victim to high interest rates that range anywhere between two and three percent higher than everyone else. There are many places online that offer to check interest rates against your credit and can give you an accurate estimate of how much you should be paying. Make sure you are doing your homework.
4. Proceed with caution if you feel pressured into applying for a mortgage loan that you don't understand or can't financially afford. If you do feel unsure of anything with the loan, ask your broker to explain it to you in detail, or go to someone else who you know can trust. If you are being pressured to go with a certain company for a loan, proceed with caution. Never take a loan because you feel like you are being forced into it.
When searching for a mortgage, make sure the contract does not differ from the original contract. Companies that ask for more signers, credit insurance, or prepayment penalty fees are probably looking for ways to make money off of you, and quite honestly, don't have your best interest in mind. In this case, you should take your business elsewhere.
These many things you should look for when mortgage loan hunting so you are not caught in a trap by a corrupt company. If you are ever in doubt, don't use the company, as there are many more to choose from that will be happy to take your business. Not to mention, these other companies will be able to offer you assistance with anything you are unsure of.
Understandably, many mortgage companies are reluctant to finance people with bad credit history or could not plunk down cash for downpayment. This is where a bad credit mortgage broker comes in. A bad credit mortgage broker assists people who have bad credit score, low income, or a long history of loan rejections.
Mortgage Miracle Worker?
A bad credit mortgage broker can help you get your loan approved in no time at all! In fact, the processing time of your loan is much shorter compared to that of programs offered by banks and credit unions. Make no mistake, however. While a bad credit mortgage broker can work miracles for you, he does so at a price. You will have to expend more money to get a bad credit loan. Ultimately, the loan you will qualify for will have a higher interest rate and closing fees.
Is Your Broker Trying to Break You?
Do higher interest rates and closing fees mean your bad credit mortgage broker is pulling a fast one on you? Not at all. This is standard practice in the industry. You have to remember that your bad credit history makes you a greater risk than most. The only reason mortgage companies would willingly take on the kind of risk you represent is if it proves lucrative for them in the end.
Compare, Compare, Compare
You have pretty much established that there's no way you can avoid higher interest rates and closing fees. How do you ensure you get the best deal possible? Simple. Make the rounds among bad credit mortgage brokers and compare the deals they are willing to offer. Check their rates. Even though you have to pay a higher rate, this does not mean you cannot pick the one that is the most reasonable and favorable.
The Pain of Penalties
Some bad credit mortgage loans carry a pre-payment penalty. But before you berate your bad credit mortgage broker over this, think. This is not your broker's fault. Again, this is an unavoidable pain in the neck for people with bad credit. Pre-payment penalties may be payable from six months to three years. What this means is that before you can pay off the loan, you first have to pay humongous sums of interest for at least six months. If you cannot avoid a pre-payment penalty altogether, opt for the loan with the shortest term. This way, you can pay off the loan quickly without dishing out money for the penalty.
Don't Worry, Just Wait
What if the rates prove too high for you? You have another option. Wait. It's been said the best things in life are worth waiting for, and this mantra holds true for getting a mortgage even with bad credit. Wait a while before you contact a bad credit mortgage broker. Use the time on your hands to improve your credit score. When you've successfully done this, you can then qualify for a loan with a lower interest rate.
Risk is terrifying, but it's unavoidable. In applying for a mortgage, a bad credit mortgage broker can give you a makeover - from being a walking liability to a sound investment.
Both Tabitha Naylor & Rony Walker are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Tabitha Naylor has sinced written about articles on various topics from Vitamins, Mortgage and Home loans. Tabitha Naylor is an experienced mortgage broker/consultant with Apex Financial Mortgage. For more information, or additional resources on home loans, visit