5 Myths about Bad Credit Home Mortgage Loans

Bad credit home mortgage loans are available to consumers with poor or no credit.  There are a few myths that surround these programs, let's set the record straight.

Bad Credit Home Mortgage Loans Myth #1 - I'm Getting A Low Cost or No Cost Mortgage

Truth: There is no such thing as a low or no cost mortgage. All loans have fees.

If you have bad credit, you can get a mortgage, but all mortgages have costs and fees. Bad credit home mortgage are the most expensive mortgages out there because they are high risk. It's important to keep in mind that the higher the risk, the higher the cost on any mortgage program.

Bad Credit Home Mortgage Loans Myth #2 - My Broker is Working for Free

Truth: No one works for free.

Your mortgage broker may not charge you standard fees, such as an origination fee, but your broker will be paid from the lender. Your fees may not be obvious because the broker can increase your monthly rate to cover their cost.

Bad Credit Home Mortgage Loans Myth #3 - A Subprime Mortgage is a Good Idea

Truth: Subprime mortgages have a higher rates and fees.

"Prime" loans are loans for good credit borrowers. "Subprime" is just the opposite of that and are loans that are offered with little, bad or no credit. As discussed above, higher risk loans will have more fees than other standard loans, but keep in mind they will also have rates. Our marketplace has a legitimate need for subprime loans because even consumers with bad credit histories want to buy homes. 

Bad Credit Home Mortgage Loans Myth #4 - The Loans Officer Will Look Out for My Best Interest

Truth: The loans officer will look out for the lenders best interest.

The loan adviser is employed by the lending institute and looks out for the lenders interest working with the consumer. Bad credit home mortgage loans require a heightened sense of scrutiny from the lender. However, the loan adviser may not offer you the excellent service a consumer deserves. It is up to the consumer to make sure they are educated on bad credit home mortgage loans to be certain their own needs are being met.

Bad Credit Home Mortgage Loans Myth #5 - You Must be Able to Show a W2 to Qualify for a Bad Credit Mortgage

Truth: Self employed, investment income, and other unconventional earnings do qualify.

A low doc or no doc bad credit home mortgage is available for those consumers who are unable to provide a W2 for the loan. A low doc or no doc mortgage will have a slightly higher interest rate.