Another way subprime mortgage lenders can take advantage of unsuspecting borrowers is by lender having a pre-payment penalty on loan that is unreasonable and not fair to borrower, based on their qualifications. A typical subprime mortgage loan will have a 6 month to a 2 year pre-payment penalty. However, sometimes a subprime lender will offer a loan with a 3 year or higher pre-payment penalty. That is too high, I think a 2 year pre-payment penalty is high, but any higher than that, and you should probably keep looking for a new lender.

Other than a couple of things to be careful of when dealing with subprime lenders, getting approved, even with a slightly higher interest rate, can be a really great thing for you to buy home you want.

3. Pay down open credit line balances. If you can even pay down balances on any open lines of credit, this will boost your credit score. Your credit score is lowered when lines of credit are maxed out. You can make good use of your money by paying down credit card balances to boost your score.

Once you have used some of these techniques to boost your credit score, be persistent about contacting and applying with many different bad credit mortgage lenders. Many bad credit mortgage loan brokers claim that if they can’t do loan, then no one can. That is simply not true. All mortgage loan brokers have connections with many different lenders and loan programs. What may be impossible with one, can be very possible with another broker.

If your score is around 600 or slightly higher, you will probably have a pre-payment penalty. Pretty much all bad credit mortgage loans will come with a pre-payment penalty. Talk to your lender about details of pre-payment penalty. Find out how long penalty will last and exactly how much money penalty is. How much is fine for pre-payment on loan? This is an important factor to consider when comparing lenders.

To get a approved for a bad credit mortgage loan, be persistent, work on your credit score as much as you can to get it above that 600 mark and apply with or contact many lenders to compare mortgage loan programs.