Buying A Home After Bankruptcy - Beware Of Shady Subprime
Mortgage Lenders
If you have a recent bankruptcy and are looking to buy a home,
be careful of unethical or predatory lenders. Whether you are
looking online or offline for a mortgage lender, it is becoming
increasingly more common that subprime lenders are taking
advantage of bad credit borrowers.
Many lenders will take advantage of borrowers with recent
bankruptcies and bad credit because they know that the borrowers
loan options are limited. Sometimes these lenders will charge
excessively high fees, extensive pre-payment penalties on the
home or ask for a fee upfront to "process" the loan.
Here are some tips on applying for a mortgage loan after a
bankruptcy:
Beware of the Lender Asking For a Fee Upfront - Anytime you are
applying for a mortgage loan, the only fee you should ever have
to pay is the application fee which covers the cost of the
lender pulling your credit application. Some lending scams
involve asking for a processing fee of hundreds to thousands to
process the loan.
Compare Loan Offers - If you can compare from 3-4 mortgage
application quotes then you will know what to expect the current
interest rate for subprime mortgage loans to be. If you accept
the first mortgage loan offer you have, you may be paying a much
higher interest rate than what is reasonable for your credit
history.
Get Closing Costs in Writing - Brokers know that if a borrower
has bad credit, they are most likely going to be more concerned
about getting a reasonable interest rate and just getting
approved than making sure they get normal closing costs. This is
where many lenders will ding the borrower with credit problems.
They will sometimes charge excessive closing cost fees. Get the
list of closing costs in writing ahead of time and then do
research online to make sure that the costs are reasonable. If
the costs are not, go back to the lender and tell them that the
closing costs are too high and you will not go through with the
loan until they are lowered to be what is normal. The broker
will usually comply, because they don't want the loan to fall
through.