A bad credit mortgage broker is essentially no different than any other mortgage broker except that they specialize in finding mortgages for people with less than perfect credit. Since the beginning of the current financial turmoil in late 2007, many mortgage brokers have chosen to specialize in this area as there is an ever increasing number of potential home buyers whose credit has taken a hit over the last few years. Is it worth using one of these specialized mortgage brokers?
Almost all major mortgage lenders today have special programs designed specifically for potential borrowers with bad credit. In fact, you can even still get a bad credit 2nd mortgage. Further, these bad credit mortgage programs differ significantly, so shopping around is usually well worth the effort. This is why it is usually in the best interest of a potential borrower with bad credit to go through a broker in general. Assuming that the broker only gets paid once you get a mortgage loan, they have a strong incentive to both help you make yourself look better to lenders and to find lenders that are willing to work with you.
While almost any mortgage broker will be aware of at least a few of these lender programs designed for people with bad credit, the idea behind bad credit mortgage brokers is that they should have a more comprehensive familiarity with these programs. Therefore they should be able to find lenders that are appropriate and they should be able to do so much faster than a more general mortgage broker. Further, there is a presumption mortgage broker for bad credit will be able to give you better advice for making your application more appealing to lenders.
On the negative side, many brokers billing themselves as having a specialization in bad credit mortgages are really just normal mortgage brokers that have adopted the pretense to specialization as a marketing ploy. Similarly, some bad credit mortgage brokers take advantage of their alleged specialization to demand fees upfront, and this significantly lowers the incentive for them to legitimately help the borrower. After all, if they are paid upfront fees they get paid regardless of what they actually do for you. For these reasons, some caution and background investigation is probably merited.
In general, if you have bad credit and want to obtain a mortgage, you should instruct your broker to find several lenders that are willing to lend to you as opposed to just one. Further, if at all possible, you should stick to brokers that only get paid once you actually get approved for a mortgage, as these have much more of an incentive to ensure your
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