Bad credit mortgage lenders - 3 things to expect

Residential mortgage lenders can get you into a home even if you have bad credit. When dealing with a subprime borrower, you can expect simpler application requirements. You can also choose just the right mortgage terms, from a fixed rate to an interest-only mortgage. Most importantly, you can expect reasonable rates from lenders who provide you with genuine customer service.

1. Easier Mortgage Application Requirements

You can look forward to easier application requirements from subprime borrowers. Finance companies that mainly deal with people with bad credit will not automatically reject your application if you have bankruptcy or foreclosure on your credit report.

Instead, they look at your full financial records, including monthly income and assets. Then they offer you a financing package. The better your credit and equity, the better your rates. Subprime mortgage rates range from 2% to 12% above the market rate.

2. Flexible mortgage terms without PMI

You'll also have a lot more options when it comes to your terms, and subprime borrowers don't need private mortgage insurance (PMI). So depositing less than 20% will not cost you hundreds a year in insurance premiums. You can even find zero loans or zero cost loans.

It's important to remember that terms and conditions also affect your rates and payments. For the lowest payments, look to a variable rate mortgage with limits. You can also find ARMs that refinance after two years to lock in rates.

Points can save you money by lowering rates. But you may find that a better strategy is to rebuild your credit and then refinance at lower rates. If this is your plan, make sure you don't pay a penalty for early payment.

3. Reasonable home interest rates from legitimate mortgage lenders

Bad credit does not automatically mean high rates. Legitimate lenders offer you reasonable rates. The key is to look for them. Online sites can help you find great rates when you request quotes. Search through brokers and individual sites to find those hidden deals.

Online lenders remain competitive through their rates and customer service. So you can often find offers that waive fees or do not require points. Be sure to explore all your options before signing a contract.