Things to Look For In a Bad Credit Mortgage Broker

Finding a reputable mortgage broker, no matter what your credit history, is an important part of buying or refinancing a home. While most lenders are out to protect both you and themselves, there are some who are out to take advantage of those in a poor credit situation. If you know what to look for, you can easily find a competent bad credit mortgage broker who will truly help you. Educating yourself about loan practices is your best defense against shady lenders. Here are a few warning signs that should alert you to take your money and run.

When discussing loan terms with a lender, ask about prepayment penalties. If that particular broker gives you a quote that is well outside the acceptable range, you will want to take your business elsewhere. Another sign that you need to shop for another bad credit mortgage broker is very high points fees. Most points fees are in the 1% range, but a broker that is taking advantage of others' poor credit situation may charge substantially more to buy down your interest rate. This is a huge red flag that your bad credit mortgage broker is not working in your best interest.

Unusual requirements, such as required life insurance policies, are a major warning sign. Usually a shady bad credit mortgage broker is getting a kick back of some kind in selling these policies and are just out to make an extra buck. Also, if your broker is pushing you toward a loan type that you are not truly happy with, when you feel you qualify for something better, you may want to reconsider. Again, they may be getting some sort of bonus for selling that particular type of loan, and will try to talk you into something that will make them money, rather then what is in your own best interest. Good lenders are out to find the best program for you both, not just put money in their own pocket.