If you have poor credit you might think your mortgage options are limited. This is true to some degree; however, it is possible to find a decent mortgage with a poor credit rating. Here is what you need to know to get started.

With a bad credit your options from traditional mortgage lenders are not good. The subprime mortgage market however, is a different story entirely. Subprime lenders are those that specialize in poor credit lending, some exclusively so. These mortgage lenders are flexible and offer a wide variety of mortgages for almost any situation.

Before you dive into subprime lending, make sure all of your other options have been exhausted. The reason for this is subprime lenders are going to charge you a premium for every aspect of your loan. If you can qualify for an FHA or VA mortgage you will be much better off then going with a subprime lender. If you have exhausted all other avenues to acquire traditional financing be prepared to pay more.

Bad credit lenders charge more for their loans, not just higher interest rates. Be prepared to pay upfront points, higher closing costs, higher lender fees, and in all likelihood, have a stiff prepayment penalty attached to your loan. Your goal with bad credit lending is to find the financing you need with the flexibility of being able to refinance two or three years down the road.

During this two or three year period you will rebuild your credit, make your payments on time, and put some money in the bank. If you are diligent with your credit building efforts you will be able to refinance with a normal mortgage lender and save yourself a lot of money. To learn more about this process register for a free mortgage guidebook.