Avoid Using Bad Credit Mortgage Lenders

6 Reasons to Avoid Using “Bad Credit Mortgage Lenders,” and What You Can Do Instead

Home ownership is an excellent way to invest in your future. What if you are upside down on your current mortgage and need a loan modification, though? Perhaps you are unable to find a lender to give you a mortgage loan because you do not have decent credit? Do you have to move or need a bigger house because your family has outgrown your current dwelling but have little equity?

Lenders that give mortgages with bad credit are lurking, looking for consumers that desire to own a home but do not have satisfactory credit or little equity in their property. These loan crooks present themselves as incredible opportunities. Some of the scam lenders go beyond unethical, and their activities are criminal. They try to look like legit lenders by mimicking and having similar names as other reputable lenders. If you fall into that category, we can help set things in motion for you to make a home investment.


Things to Avoid Like the Plague!

mortgage scamsBelow are some of the crooked practices you may find when searching for a home loan:

  • Bait & Switch: There are unprofessional lenders out there that begin to work with you making promises of good to decent interest rates. When you are near the closing process they change the product you are eligible for with another that has a much higher interest rate. Their goal is to exhaust you with paperwork in hopes that you do not notice or that you agree because you have invested so much time.
  • Stripping Lease Back Scheme: These guys look for homeowners that are having difficulty making mortgage payments and have equity in their property. The company presents themselves as the hero, helping you stay in your home with the option of owning it in the future. They buy your home from you with a promise that you can repurchase it at a later date. Then, they will have the audacity to lease or rent your house to you while you get caught up on the delinquent mortgage payment. Whatever equity you had would be sold to them, and if you were late to make any of your lease payment, they would evict and terminate any arrangements for buyback.   
  • Illegal Flipping: Despite the name, illegal flipping, it is in fact legal. Unfortunately, they are typically not telling the truth about the value of the home. The flippers will make poor renovations that will make the house look pretty but not safe, accurate or quality. The inexperienced buyers think they are getting a beautiful home, unaware of the inflated price. If they can get a scrupulous mortgage broker to work with them, they will give mortgages for bad credit. The illegal flippers probably have the appraiser in their pockets as well so they can inflate the price. The house is worth less than the documented appraisal.  
  • Loan Flipping: Loan flippers seek homeowners out that have equity in their home. They encourage them to refinance to cash out their equity for personal use. In theory, it sounds like an excellent plan to get cash from your equity to finance a home project. You will get your equity minus their fees for closing. Every time you refinance, it will eat some of your equity with closing costs. Refinancing is a good idea to lower your interest rate, which will lower your principal mortgage.
  • Phantom Help: Phantom helpers seek you out and suggest they can negotiate a deal with your lender. They will discourage you from communicating with your current mortgage company, credit counselor or attorney. Of course, there is a fee, and they will require it upfront. They might even ask you pay your mortgage payment directly to them. The red flag of this activity will be a request to wire cash or to make a payment with a prepaid debit card.
  • Advanced Fee Loan, Loan Origination Fee: They will guarantee you a loan if you pay an upfront fee. The sign of things to come is if they do not seem interested in your credit information. They urge you to sign up immediately before the offer expires. If they pressure you, you need to make a run for your money.  


What You Can do to Get Help with Your Mortgage Loan

Bad Credit Mortgage LendersContact your lender directly: Lenders want to work with you. Lenders already have their money invested in your property, and they build their business by you making regular payments. They want to help you stay on track.

No fees for a loan modification: A loan modification is an excellent solution if you’re having trouble making your payment. You can contact your lender, and they will give you information on what is available to you. They will provide the service at no fee and won’t send you to an outside company.

When working with any loan company, you should:

  • Check if they are a registered to do business in the United States. If you question if the company contacting you is legit, you can check if they are an authentic business. Contact your state Better Business Bureau and find out if they are registered to do business.  
  • Verify their information. Make sure that they are using a secure web address and physical address, and are registered to lend in your location. If you are dealing with a company online, make sure the web address is secure. Does it say “https” at the beginning of the address? Does it have a padlock icon in the address bar? Do they have a physical address? Check on Google Earth to ensure their address is not an empty field.
  • Listen to Your Gut. If it feels like it is too good to be true, it probably is.


Build up Your Credit Score 

To restore imperfect credit requires having discipline and having an awkward conversation with less than friendly bill collectors. It’s not a quick fix, but a smart fix.

Some trustworthy lenders would love to do business with you. Homes for Heroes is proud to be one of them. For our heroes, we also give you the perk of saving you money by offering you discounts when you use one of our real estate agent affiliates. We continue the savings by connecting you with some local price cuts in your community. Contact us to hear how we can save you some money.

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Connect with a local specialist today to maximize your savings.

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