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Bad Credit Lender or Broker?

By Barbara Marquand
Mortgage Credit Problems Columnist


To get a bad credit mortgage, you can work directly with a lender or go through a mortgage broker. Which is better?

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Either way, you can get a good deal if you shop carefully. Here are some things to keep in mind:

1. Professional Reputation

Whether you choose to do business with a broker or directly with a bank, get referrals and check out the reputations of the brokerages or banks you consider. When checking out brokers, ask how long they have been in business. Look for someone with staying power in the industry.

2. Bad Credit Mortgage Comparison Shopping

Because they have access to the products of multiple wholesale lenders, brokers say they can offer a wider array of loan products than what bank loan officers can provide. But a bank also has many loan products at its disposal, and you can compare offers among lenders yourself. As a start, enter your information on this page to get up to four free quotes.

3. Your Needs

The National Association of Mortgage Brokers (NAMB) says that although brokers offer a wide array of choices, it's up to consumers to determine the best deal. That of course will depend on an individual's circumstances, needs and goals. Keep in mind that mortgage brokers don't work for lenders or for you. They function as independent contractors to match consumers with lenders, and they make money after the loans close.

4. Poor Credit Mortgage Fees

You'll pay fees for services, whether you go through a lender or a broker. Mortgage brokers charge consumers fees because they provide the same services as loan officers, such as taking the application, getting the credit report and appraisal, reviewing the loan process with the consumer, and collecting the documents. Brokers also make money from fees provided by lenders. NAMB acknowledges there are "isolated instances" of brokers adversely steering consumers to wholesale lenders who pay the highest fees, but in general government-mandated disclosures arm consumers with information to compare loans. Read disclosures carefully and do some comparison shopping to make sure you get the best deal, whether you go through a broker or a bank.

5. Bad Credit Mortgage Terms: Make Sure You Understand

Complaints have mounted from consumers who claim they were steered into bad credit mortgages they didn't understand by unscrupulous lenders. Don't let your eyes glaze over with all the paperwork. Get help from a third party if you don't understand the loan terms.

Whether you work with a lender or a broker, remember it's up to you to understand the terms before you sign.

Sources

http://www.realestatejournal.com/ / http://www.namb.org/

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