Bad Credit Comeback Loans

Now there's a new product in town for those of you who are worried that credit issues will only qualify you for a bad credit mortgage. It is called a credit comeback loan and it is designed to help you purchase a home or refinance an existing one without resorting to a bad credit loan with exorbitant interest rates.

How Does a Credit Comeback Mortgage Loan Work?

Borrowers who suffer from bad credit are often put into bad credit home loans with high interest rates. A Credit Comeback Loan allows a borrower to qualify for a 30 or 40 year fixed rate loan or an adjustable arm (including interest only options) and drops the borrower's interest rate by .375% per year (for up to 4 years) if the borrower makes her mortgage payment on time. This can mean a reduction of up to 1.5% on the borrower's interest rate! After the four year period is over, the borrower now has a fixed rate for the life of his loan and avoids the need to refinance out of a higher interest rate bad credit mortgage.

When Should I Look into a Credit Comeback Loan vs. a Bad Credit Mortgage?

Don't settle for a bad credit mortgage, if you are looking at a new home purchase or a refinance and the rate you are quoted is over 7.5%, talk to your lender about a credit comeback loan. Credit comeback loans will allow borrowers whose fico scores are as low as 500 to qualify for a home mortgage loan. Don't settle for the exorbitant rates of a bad credit mortgage; realize your dreams, while improving your credit, with a credit comeback loan.

Knee-Deep in Debt and Bad Credit Doesn't Mean You Can't Refinance

Many homeowners become immobilized by fear and think they can't qualify for a loan because of bad credit. The truth is that life happens--emergency medical bills may have begun the cycle of bad credit for you--but there are things you can do to improve your bad credit and refinance your loan.

The important thing to keep in mind with bad credit is that lenders want to make you a loan--you just have to find the right kinds of lenders that can work with people with poor credit. You can't sit around and wait for your credit to magically improve, or hope that time will cure all ills--you need to take action. If you want to make home improvements, don't let your bad credit prevent you from applying for a mortgage refinance.

The First Step to Improve Your Bad Credit

The first thing you can do towards your goal of a mortgage refinance, and forgive me if this seems obvious, is to find out exactly how bad your credit really is and why. Go online to one of the credit agencies and get a free credit report. Check your report thoroughly for accuracy. There are countless cases of people who found and disputed mistakes on their reports, making significant headway on improving their bad credit.

Pay Off What You Can

Any small debts you have you should pay. The little amounts can really add up, but they are also one of the easiest places to start in improving your credit. Try to pay your credit card bills down to less than half of the card's limit. This helps prove to lenders that you are not already over-extended.

Take Action

By making these small strides to improve your situation, you'll be better able to qualify for the loan for which you've been looking. Bad credit will not totally prevent you from qualifying for a mortgage refinance. If you want to refinance your mortgage but have bad credit, the worst thing you can do is nothing.

Bad Credit Refinance: The Only Color that Should Matter is Green

While lenders might defend their predatory tactics by saying that certain minorities or ethnic groups statistically pose a higher credit risk, the fact of the matter is that there are a number of companies out there looking for easy victims and a quick buck.

Minorities looking for a bad credit home loan refinance are often targeted with no-hassle advertising messages followed by high-pressure sales tactics. While it is understandable that someone with bad credit might pay a higher interest rate on their mortgage refinance, is it fair to have an inordinate number of sub-prime lenders seeking out business from minorities?

Mortgage Refinance Numbers

A study conducted in Texas a few years ago revealed astonishing numbers. Of the borrowers who earned greater than $60,000 annually and borrowing less than 2.5 times their income, 16.7% of white borrowers obtained a mortgage refinance from a high-cost sub-prime lender as opposed to over 30% of Hispanics and almost 47% of African Americans. According to the Washington Post last year nearly 30% of African Americans ended up with high-cost loans compared with only 10% of white Americans.

Bad Credit Protection

For those of you who are minorities, have bad credit, and are interested in a mortgage refinance -- there are steps you can take to protect yourself from predatory lenders:

* Get quotes from more than one lender
* Ask questions
* Don't fall prey to high-pressure sales tactics -- if you don't feel comfortable with the lender then don't get the loan.

These are a just a few tips to help you protect yourself. Getting a bad credit home loan refinance doesn't mean you have to get taken for a ride. Watch out for the deal that is "too good to be true" because it probably is. Many of these lenders have created programs that perpetuate risk and make things more challenging for the borrower. Sometimes this can lead to foreclosure. Prevent this from happening to you by asking questions and keeping your eyes open.