Legitimate sub-prime lenders provide a needed service to many wishing to buy a home.By offering financing to those with adverse credit, sub-prime lenders offer a valuable financing options.However, predatory lenders take advantage of people with poor credit by charging excessive fees, forcing foreclosures, or demanding titles.To protect yourself in your home loan search, avoid these common mortgage scams.Excessive Interest Rates And Fees.Predatory loans require a borrower to pay excessive upfront costs or high fees.Some state laws protect consumers by putting caps on interest rates or fees.If you have bad credit, you should be paying no more than 8% higher than a conventional loan.Limits on closing costs vary, but anything more than five points should be viewed suspiciously.Forcing Foreclosures.Another lending scam involves lending to people so they will be forced into foreclosures.These types of loans typically have monthly payments so high, you can't possibly pay them.They lure people in by promising guarantee approval or cashing out your equity, but they charge high interest rates.Before you sign a loan, be sure you can afford the monthly payments.Demanding Title.A growing scam involves supposedly refinancing your mortgage, but in reality they scammer is pocketing your cash and title.There are many variations on this scam, but usually these con-artists will solicit those who have liens against their property or received a foreclosure notice.They make a promise of solving all your financial problems if you turn over your title and pay an up front fee.The scammer will then file for bankruptcy in your name that will be dismissed since a third party initiated the process, but it will still leave a mark on your credit report.The scammer will also take mortgage payments from you, even though they didn't pay off the first mortgage.In the end you may lose your house.Protect Yourself.Protect yourself from these scams by being a savvy shopper.Request quotes from several lenders before picking one.If you have any questions, talk with the lending company.Legitimate lenders will be happy to explain the process and answer any of your questions.Once you pick a lender, be sure you read all forms before you sign the paperwork.According to federal law, you have three days to cancel your mortgage after settlement.You will also be refunded all fees, except the application fee.To view our list of recommended subprime mortgage lenders online, visit this page. Recommended Subprime or Bad Credit Mortgage Lenders Online.

One of the most important parts of choosing a bad credit mortgage company to work with is avoiding predatory lenders.Predatory lenders run smooth operations, and specialize in taking advantage of those who are inexperienced or think that they have few or no other loan options.However, thoughtful and informed mortgage company shopping will go a long way towards avoiding predatory lenders and the hook, line and sinker methods they employ.Watch The Hook - If a bad credit lender is trying to hook you - making first contact and aggressively selling their services - be suspicious.When avoiding predatory lenders, you'll have to be alert, as some use more subtle types of hooks than the blatant hard sell.They may sprinkle their conversation with such phrases as 'bad credit, no problem,' and make it all seem very easy.A predatory lender may try to rush you, perhaps pushing you towards a deal, saying it may not be available much longer.They are interested in making their fees, and you keeping the house is not important to unscrupulous bad credit lenders.In fact, it's better for them if you don't.Beware of The Line - Knowledge is the best way of avoiding predatory lenders when seeking a bad credit lender.Predatory lenders count on their victims not having a lot of knowledge about the lending process, legal or financial.If you do a little research prior to seeking a lender, you have less of a chance of being fooled by some of the lines predatory lenders use.You won't be lured into a loan that is too high under the premise that you'll be able to refinance after a year or so for a lower rate.A legitimate new home loan bad credit lender will advise you against an arrangement that consumes more than 30% of your monthly income.You'll know to read every word of the contract to make sure that it matches exactly what you were told.With research, you'll know what common lending rates and fees are and be able to compare with clarity, rather than be taken a smooth line.Avoid The Sinker - Often, predatory lenders prey upon those that they consider to be in a financially precarious position.They prey on people who feel as though they don't have a lot of choices when it comes to lenders.Unprincipled new home loan bad credit lenders take advantage of these situations by offering arrangements that court loan repayment failure.These include balloon payments, a large sum due at the end of the mortgage, prepayment penalties, which punish the borrower for paying off the loan early, generally through sale or refinancing, and mandatory arbitration clauses, which do not permit you to bring a complaint against the lender to court.When it comes time to shop for a bad credit lender, do your research first.There are numerous resources available to help you in avoiding predatory lenders.And, remember, no matter how bad your credit may be, you always have a choice.Making the choice to wait is always better than accepting a predatory loan arrangement.