I have spent hours searching online and have come up with zip. If you have bad credit, home loans seem to be out of your reach right now. Any search of sub-prime mortgages, bad credit mortgages, high risk mortgages, home loans for people with bad credit, or bad credit refinance comes up empty these days. But you still might have some options.

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Hard money lenders are popping up to take up some of the slack created by the exit of most subprime lenders from the marketplace.

What Is a Hard Money Lender?

A hard money lender is any person or group of people who has money available for investment, usually in real estate. The amount of money available varies, and so does the criteria for lending. Loans available from hard money lenders are usually short-term, though, so you'd want to improve your credit rating as quickly as possible so that you can eventually refinance with traditional financing.

Despite its name, "hard money" isn't that hard to find. The terms, however, are ugly--toad-on-a-birthday-cake ugly! The financing comes from private individuals who need to profit as much as possible in order to justify the risk they take lending to you, the bad credit borrower. The terms are draconian--several points upfront and rates about 6% higher than what you'd get as a prime borrower from a national lender. In addition, you need a hefty down payment or a ton of equity to even be considered for financing.

Hard Money Alternative

If you actually have a huge down payment and enough cash to pay several points in fees, try a conventional lender first. Even bad credit can sometimes be offset by a great equity position and good income. It only takes a few minutes to see if you stand a chance at getting an approval as these loans are underwritten electronically.

Refinancing with Bad Credit

If you have a clean credit history for the last 12 months and no foreclosures within three years or bankruptcies within two years, take a shot at FHA. Even if you are declined, your loan officer should be able to tell you what you need to do to get qualified for an FHA refinance. Then put yourself on a budget and plan for a better mortgage.

Unable to Get a Bad Credit Refinance? Try Mortgage Modification

Want a free refinance--to a 2% rate? That's a mortgage modification. If your current housing payment (PITI) is more than 31% of your gross (before tax) income, you may qualify for one from your lender or loan servicer. Check with www.makinghomeaffordable.com for more information. Then contact your lender to get a trial modification. Get all the paperwork your lender asks for (its worth paying an accountant to help you if the forms are too much trouble) and be sure to make your modified payment on time if you want the new arrangement to be permanent. For homeowners with bad credit, a modification is probably easier to obtain than a refinance from a bad credit mortgage lender today.