Archive for Bad Credit Mortgage Loans

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.

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What is a bad credit mortgage loan?

Bad Credit mortgage loans are loans for people who have low credit scores. Bad credit mortgage loans usually have high interest rates as a low credit score creates a greater risk for the lender as it shows a pattern on inconsistent payment in the past.

What is a credit score?

A credit score, also known as a FICO (Fair ISAAC & Company) score is a system of analyzing credit and debt. Lenders use credit-reporting agencies that supply customers FICO score to help them determine if the customer is credit worthy. It determines whether the customer will receive a bad credit mortgage loan or a traditional mortgage loan.

How are credit scores determined?

The credit reporting companies use a formula to determine credit scores. The formula, however, is kept confidential (thanks to a US Congress ruling). Generally, if you make your payments on time, and do not over extend your finances by spending more than you make, you will have a good credit score.
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What is a bad credit mortgage loan?

A bad credit mortgage loan is also called a sub-prime mortgage. This means the rates and fees are less desirable than a standard mortgage. A bad credit mortgage loan is a loan program designed for people who have especially bad credit. Bad credit mortgage loans are very risky for lenders; therefore, the borrower will be required to pay higher interest rates, prepayment penalties, and higher closing costs. Although a bad credit mortgage loan may appear to be undesirable, it may be the only option for a person with a history of late payments and defaults. Read the rest of this entry »