Experts in the mortgage industry say that the exit of most subprime lenders from the business will make it harder for people with bad credit to find mortgages.

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Well, duh.

Bad credit or subprime mortgages are usually defined as those with rates at three or more percent higher than those of prime mortgages. Prime loans, including FHA mortgages are at about 5% these days. So subprime lenders would be charging at least 8 percent. If you can find them. The next stop for folks with bad credit is hard money, which these days runs at about 11% to 20%, requires substantial home equity or down payments (25% to 50%), and costs several points upfront.

The exit of bad credit mortgage lenders from the marketplace pushes those who "just missed" qualifying for a prime home loan all the way down to the same financing Bernie Madoff will probably get when he is released from jail. Nothing in between.

Have you "just missed?"

If so, you have a few options. There is hard money, as I mentioned. It's not always a bad deal. Many investors take that route when they need to take advantage of a screaming deal fast, say a foreclosure home on the court-house steps. If you can afford the payments and the initial investment, you could whip your credit into shape and then refinance or whip the property into shape and then sell. 15% interest might be okay when you expect to make 30% on the deal.

But for more normal purchases, there are other choices. One is owner financing or a lease option. These days many are selling, few are buying, and this is probably your best chance at securing help from a seller. There are rules for this and I don't advise you to take on this sort of transaction without the advice of a real estate attorney.

Then, you can visit your friendly FHA-approved lender. Find out what you need to do to get a loan. Go see a non-profit credit counselor and make a plan. This is probably your best option for long-term financial help. If you have poor debt management skills, you'll need to improve them if you want to live happily ever after.

The end.