When looking for a bad credit mortgage company to work with, one of the most important things to do is to stay away from predatory lenders. Predatory lenders run smooth businesses and take advantage of people who don't know much about loans or who think they don't have many or any other loan options. But shopping for a mortgage company with care and knowledge will help you avoid predatory lenders and the tricks they use to get you to sign on the dotted line.
Watch The Hook: If a bad credit lender tries to "hook" you by getting in touch with you first and trying to sell you on their services, be wary. If you want to stay away from predatory lenders, you'll need to be on the lookout, because some of them use less obvious ways to get you to borrow money. They might say things like "bad credit, no problem" to make it seem like everything is easy. A predatory lender may try to get you to act quickly by telling you that a deal may not be around for long. Untrustworthy bad credit lenders only care about getting paid, not about you keeping your house. In fact, they would be better off if you didn't.
Beware of The Line - The best way to avoid predatory lenders when looking for a bad credit lender is to know what to look for. Predatory lenders count on their victims not knowing much about the legal or financial side of the lending process. If you do some research before you look for a lender, you are less likely to fall for some of the tricks that predatory lenders use. No one will try to get you to take out a loan with a high rate by telling you that you can refinance after a year or so for a lower rate. A legitimate lender for a new home loan with bad credit will tell you to avoid a deal that takes more than 30% of your monthly income. You'll know to read every word of the contract to make sure it matches what you were told. If you do some research, you'll know what typical lending rates and fees are and be able to compare them clearly, instead of being led along a smooth line.
Avoid The Sinker. Predatory lenders often take advantage of people they think are in a bad financial spot. They take advantage of people who don't think they have many options when it comes to lenders. Unmoral lenders take advantage of these situations by offering plans that make it impossible to pay back the loan. There are things like "balloon payments," which are big payments due at the end of the mortgage, "prepayment penalties," which punish the borrower for paying off the loan early, usually through a sale or refinancing, and "mandatory arbitration clauses," which mean you can't go to court to sue the lender if you have a problem with the loan.
Do your research before looking for a lender for people with bad credit. There are a lot of ways to help you stay away from predatory lenders. And remember, you always have a choice, no matter how bad your credit is. It is always better to wait than to take out a loan from someone who will take advantage of you.
