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If you wish to purchase a new home or refinance your existing mortgage to get cash-out, but are worried as to whether or not you will qualify for a loan due to a poor credit history, do not despair…bad credit mortgage loans are available for people just like you.

Bad credit mortgage loans also known as sub-prime home loans are offered by select lenders who specialize in these type of mortgage loan programs. These lenders do not follow the same hard core guidelines as traditional banks and credit unions. Their guidelines allow for credit mishaps that are considered taboo with traditional home loan lenders. What this means for you, the borrower, is that when you apply for your home loan with a sub-prime mortgage lender you have a great chance of receiving loan approval despite the fact that you have a less than stellar credit history.

Bad credit mortgage loan lenders are actively seeking out people with credit problems and they have buckets of money to lend! Sub-prime mortgage loan programs are available for people who have the following type of derogatory items in their credit history: bankruptcy, foreclosure, judgments, late payments and collection accounts.

Depending on the severity of your credit problems, you more than likely will have to pay a higher interest rate with a bad credit sub-prime mortgage as opposed to a traditional conventional loan. Many people with bad credit obtain a bad credit mortgage loan and use this as a stepping stone to rebuilding their credit history. Then, after 2 – 3 years, once they have cleaned up and re-established their credit, they refinance to a lower rate conventional loan.

Not all lenders offer bad credit mortgage loans. Make sure the lender you are considering offers sub-prime mortgages before applying with them. You will save yourself time and keep unnecessary inquiries off of your credit report.

In the past, homebuyers more or less had limited mortgage loan options. These days, there are more options than you can shake a stick at, but heres a primer on the basics.

Mortgage Loans

With the real estate market explosion over the last 10 years, a call has gone out for unique mortgage loan programs. Bankers have been more than happy to answer the call. For many borrowers, traditional mortgage loans still fit the bill. Heres an introduction.

1. Conforming Loans The loans comply with requirements set down by Fannie Mae and Freddie Mac, two government sponsored entities that buy and sell loans from mortgage lenders. These entities put strict caps on the loans they will buy, with single-family homes having a mortgage cap in the range of $360,000. With the booming real estate market, many areas such as San Diego do not come close to fitting into the conforming loan market since homes average in the $600,000 range.

2. Non-Conforming Loans Known as Jumbo Loans, these mortgages are written for loans that exceed the $360,000 cap mentioned previously. They tend to have slightly higher interest rates, but are readily available.

3. Bad Credit Loans In the mortgage industry, mortgage brokers often refer to a borrowers paper. This paper refers to people with less than stellar credit. B paper refers to relatively small problems, while D paper refers to bigger issues such as bankruptcy filings. The worse your paper, the more you can expect to pay in interest, points and down payment amounts. You need to carefully determine whether paying these extra penalties makes financial sense.

Interest Rates

With each of the above loans, youll have an option of going with a fixed interest rate or an adjustable rate. Fixed interest rates simply set a definitive interest rate that will be charged over the length of the loan. Adjustable rates typically start at a figure lower than fixed rates, but can be moved up to reflect changes in the cost of borrowing money. In many ways, you are betting whether interest rates will increase in the future.

For a great majority of people, basic mortgage loan options still suffice when it comes to borrowing money. Dont fret if you have problems qualifying for these loans. There are many other options on the market these days.

If you wish to purchase a new home or refinance your existing mortgage to get cash-out, but are worried as to whether or not you will qualify for a loan due to a poor credit history, do not despair…bad credit mortgage loans are available for people just like you.

Bad credit mortgage loans also known as sub-prime home loans are offered by select lenders who specialize in these type of mortgage loan programs. These lenders do not follow the same hard core guidelines as traditional banks and credit unions. Their guidelines allow for credit mishaps that are considered taboo with traditional home loan lenders. What this means for you, the borrower, is that when you apply for your home loan with a sub-prime mortgage lender you have a great chance of receiving loan approval despite the fact that you have a less than stellar credit history.

Bad credit mortgage loan lenders are actively seeking out people with credit problems and they have buckets of money to lend! Sub-prime mortgage loan programs are available for people who have the following type of derogatory items in their credit history: bankruptcy, foreclosure, judgments, late payments and collection accounts.

Depending on the severity of your credit problems, you more than likely will have to pay a higher interest rate with a bad credit sub-prime mortgage as opposed to a traditional conventional loan. Many people with bad credit obtain a bad credit mortgage loan and use this as a stepping stone to rebuilding their credit history. Then, after 2 – 3 years, once they have cleaned up and re-established their credit, they refinance to a lower rate conventional loan.

Not all lenders offer bad credit mortgage loans. Make sure the lender you are considering offers sub-prime mortgages before applying with them. You will save yourself time and keep unnecessary inquiries off of your credit report.

Buying A Home After Bankruptcy Low Credit Score Mortgage Loans

Excellent credit is not required to buy a home. Of course, a higher rating will qualify homebuyers for a low rate and better loan programs. Still, buying a home after bankruptcy is easy.

Although home loans following a bankruptcy discharge come with high rates, a home purchase is a great way to quickly boost a low credit rating. Here are a few tips on getting a low credit score mortgage loan.

Sub Prime Mortgage Loan Programs

There are many options available to homebuyers with a low credit rating. Credit scores below 680 do not qualify for prime home loans. Hence, these persons will need to speak with a sub prime mortgage broker or lender. Sub prime loans are intended to assist those who cannot obtain traditional mortgage financing. These lenders work with all types of people and credit situations. Furthermore, sub prime lenders have a multitude of different loan options.

Who Qualifies for a Sub Prim Mortgage Loan?

Anyone with a low credit score can get approved for a sub prime mortgage loan. However, there are certain limitations. Many lenders will not approve a mortgage loan if the borrower’s credit score is below 500. In this instance, the risks are too high. Homebuyers who fall into this group may consider improving their credit before applying for a home loan.

Having a chapter 7 bankruptcy, collection accounts, and judgments will not disqualify a buyer from obtaining a sub prime mortgage loan. Naturally, loans of this sort have higher interest rates. However, if the homebuyer maintains a good payment history, they will have the option of refinancing for a better rate in the future.

Other Loan Options Available after Bankruptcy

As mentioned, sub prime mortgage lenders offer a range of home loans for every need. Following a bankruptcy discharge, homebuyers have the option of obtaining a no credit score home loan. Because lenders do not offer 100% financing on these loans, buyers must be prepared to pay a 20% down payment.

Another loan option available is the zero down home loan. This loan is offered to buyers with good and bad credit. Zero down home loans include 100% financing, which is perfect for first time homebuyers and buyers with little cash savings. To qualify for a no money down home loan with bad credit, your credit score cannot fall below 580.

Buying A Home After Bankruptcy Low Credit Score Mortgage Loans

Excellent credit is not required to buy a home. Of course, a higher rating will qualify homebuyers for a low rate and better loan programs. Still, buying a home after bankruptcy is easy.

Although home loans following a bankruptcy discharge come with high rates, a home purchase is a great way to quickly boost a low credit rating. Here are a few tips on getting a low credit score mortgage loan.

Sub Prime Mortgage Loan Programs

There are many options available to homebuyers with a low credit rating. Credit scores below 680 do not qualify for prime home loans. Hence, these persons will need to speak with a sub prime mortgage broker or lender. Sub prime loans are intended to assist those who cannot obtain traditional mortgage financing. These lenders work with all types of people and credit situations. Furthermore, sub prime lenders have a multitude of different loan options.

Who Qualifies for a Sub Prim Mortgage Loan?

Anyone with a low credit score can get approved for a sub prime mortgage loan. However, there are certain limitations. Many lenders will not approve a mortgage loan if the borrower’s credit score is below 500. In this instance, the risks are too high. Homebuyers who fall into this group may consider improving their credit before applying for a home loan.

Having a chapter 7 bankruptcy, collection accounts, and judgments will not disqualify a buyer from obtaining a sub prime mortgage loan. Naturally, loans of this sort have higher interest rates. However, if the homebuyer maintains a good payment history, they will have the option of refinancing for a better rate in the future.

Other Loan Options Available after Bankruptcy

As mentioned, sub prime mortgage lenders offer a range of home loans for every need. Following a bankruptcy discharge, homebuyers have the option of obtaining a no credit score home loan. Because lenders do not offer 100% financing on these loans, buyers must be prepared to pay a 20% down payment.

Another loan option available is the zero down home loan. This loan is offered to buyers with good and bad credit. Zero down home loans include 100% financing, which is perfect for first time homebuyers and buyers with little cash savings. To qualify for a no money down home loan with bad credit, your credit score cannot fall below 580.

Annual Percentage Rate (APR): Magical Number or Myth When Shopping For Mortgage Refinancing Or Second Mortgage Loans?

Analyzing APR during mortgage refinancing or second mortgage loan shopping can be a very tricky proposition. Many people have come to believe that a loans APR, or “Annual Percentage Rate”, is the single most important factor in comparing mortgage loans. However, this is rarely the case, especially in today’s marketplace, explains Bob Peckenpaugh, Manager of CFIC Home Mortgage.

Annual Percentage Rate is defined as “the cost of consumer credit as a percentage spread out over the term of the loan. Most consumers have no idea what makes up this elusive number. APR is a valuable tool in comparing various mortgage loan programs, but it should never be relied upon as the sole determining factor in choosing a loan, for the following reasons:

1) Not all closing costs are calculated within the APR uniformly. According to Peckenpaugh, There is a huge variance among lenders, mortgage loan officers, and even states on which fees they include in their APR when calculating the loan. There is no standard among the mortgage industry, let alone among competing mortgage companies.

2) The costs themselves can be manipulated within the loan. For example, prepaid interest (the amount of pro-rated interest a consumer pays at closing for interest which will be earned from that date until the end of the month) can be represented as anywhere from 1 to 30 days, a potentially huge difference, especially on larger mortgage refinancing loans.

3) Manipulation of the title fees. Ordinarily, the title company’s settlement, or closing fee is an APR fee, while their title insurance cost is not. Peckenpaugh explains, Recently, in order to minimize the effect to the APR, title companies began simply decreasing their closing fee, while subsequently increasing their title insurance fee by the same amount, thereby reducing the APR.

4) Lack of industry awareness of what is accurate. Most mortgage loan or refinancing officers do not intentionally try to mislead, but inaccurate information could result in the consumer making a poor decision.

As opposed to APR, consumers would be better served by asking the following simple questions.

1) What is the mortgage interest rate?
2) What is the total mortgage loan amount?
3) What is the monthly mortgage payment (principal and interest)?
4) How much are the closing costs?

Generally, a written estimate covering all of the above can be generated by the mortgage loan-refinancing officer and provided to you in the form of a “Good Faith Estimate” and/or a “Truth In Lending Statement”. Then, you can compare these documents between mortgage lenders in order to determine the authenticity and accuracy of your quotes. For further mortgage financing or refinancing information, contact Bob Peckenpaugh, Manager, CFIC Home Mortgage, at 1-800-943-9472.