Bad Credit Mortgage Loans and Advance Fees

What is an advance fee bad credit mortgage loan?

An advance fee mortgage loan is a loan where the creditor requires the borrower to pay and advance fee to secure a loan. Advance fee mortgage loans have been associated with fraudulent loan schemes, which are against the law.

How do I know if a bad credit mortgage loan is legitimate?

• Beware of promises of “easy credit”. While these offers are tempting to people with bad credit, there is no such thing as easy credit.
• A loan you can get without a credit check or without a sizeable down payment does not exist. If a borrower could afford the down payment required for a no credit check loan, he or she would probably not have bad credit in the first place.
• According to the Federal Trade commission, “Legitimate lenders never ‘guarantee’ or say that you are likely to get a loan or a credit card before you apply, especially if you have bad credit, no credit, or a bankruptcy.”
• You should have a credit offer in writing before you are required to pay anything for the loan.
• Do not accept bad credit mortgage loans from telemarketers.

Are bad credit mortgage loans ever legitimate?

A person with bad credit can still receive a mortgage loan. While the loan may be costly by charging high interest, a higher down payment, and pre-payment penalties, they do not charge advance fees.

How do I find a legitimate bad credit mortgage?

The key to finding a bad credit mortgage is either to get referrals from people you trust, or to look for a lender with whom you are familiar. No name lenders, or new players in the loan market will have no track record you can investigate. You should avoid lenders who approach you through telemarketing or other solicitations. Should you be tempted to get a loan through a company that has contacted you, investigate them thoroughly.

Should I ever pay an advance fee to secure a bad credit loan?

It is unwise to pay an advance fee to a broker in order to secure a loan. According to the Federal Trade Commission, “The problem is that consumers who respond to such ads usually must pay fees in advance to obtain the ‘guaranteed’ loans. The consumers never receive the promised loans and either never hears again from the ‘loan’ companies, or are later told they’re ineligible for the credit. The FTC’s new Telemarketing Sales Rule makes it illegal for any telemarketer who guarantees consumers a loan or other credit to ask for money in advance.”

When will I have to pay for my bad credit mortgage loan?

Once you have been approved for your bad credit mortgage loan, you may have to make payments associated with securing the loan. These payments may include house appraisal, home inspection, and other costs normally involved in buying a house. Other payments should be made at closing like points to lower your interest rate, and other fees that you would normally pay when buying a home like homeowner’s insurance, and private mortgage insurance.