When you have a good credit history your loan application process is generally completed smoothly. Unfortunately not everyone is in this boat and for those with bad credit getting a mortgage can be a great deal more tumultuous. However there is an ever increasing rise in the amount of people in this situation and consequently the mortgage industry has responded with a wide variety of options and products. Bad credit mortgages are now available for those with a poor credit history.

Traditionally lenders have avoided dealing with clients who have bad credit. That situation has changed significantly with the rise of a whole industry of bad credit mortgage lenders. The interest rates and terms can be almost the same with only marginal differences. These mortgages can even have their amortizations (the amount of time the whole loan is spread over) set at forty years and new options are being introduced all the time.

Bad credit history can happen to anyone for a wide variety of reasons, some preventable and some not. Health care costs, job loss and divorce are just a few of the reasons that someone may find themselves in the position of having a low credit score. A previous bankruptcy, collections, court judgments and others can all count against you and prevent you from qualify for a regular mortgage.

With any of the above black marks on your credit record you can still find a high risk lender who will give you a loan, but you need to be especially careful as there have been numerous reports of unscrupulous individuals who are quick to take advantage of you in this situation.

Bad credit mortgage lenders are also called sub prime lenders. Banks and other mortgage companies like them are called prime or first tier lenders. The sub prime lenders are, just as the name suggests, lenders who provide money for those with poor credit who do not qualify for the stricter approval criteria put in place by the prime lenders.

As the demand for sub prime lending has sharply increased, many mainstream lenders are purchasing sub prime mortgage companies to augment their services and take advantage of the tremendous opportunity for growth that this market offers.

The poor credit mortgage market is not restricted to the United States either. It is estimated that one in four people in the UK would not be approved for a standard mortgage because of a bad credit history.

At one time there was a sense of shame associated with needing a specialty product such as this. That is certainly not the case nowadays and you should not let yourself feel like that. Many people form all walks of life need a bad credit mortgage for a variety of reasons.

Just because you can get a mortgage with bad credit does not mean that you should get in over your head or pursue something that is more than you can afford. You want to make sure that they monthly payments are reasonable and within your budget.

Getting a bad credit mortgage is the first step in repairing your credit rating. Once you have shown that your credit behaviors have changed and you can be responsible with the payments it is more likely that when it comes up for renewal that you will then be eligible for a regular mortgage.

Specific mortgage loans are designed for people with poor credit. The idea is to fix your credit within a year or two. In this regard you should try to get a short term mortgage with a 2 or 3 year fixed rate. Do not confuse this with the amortization, which is the total amount of time the payments are spread over. The term is the period for which you are locked into the rate and the payments. When it comes up for renewal you are eligible to pay it out without any penalties and you can renegotiate the terms and interest rate.

All bad credit mortgage loans are not created equally. The interest rate you are charged is on a sliding scale depending on your credit risk. So if your credit is only marginally poor, then you may only be looking at a slightly higher rate.

If you are still turned down even after exploring all of your options then you may want to consider consulting with a credit repair company. These programs can sometimes help you to improve your credit score in a rater short amount of time.

As you have probably noticed in the headlines, sub prime mortgages have been in the news a lot. This has made some lenders a little more cautious, but it does not mean that there is no one still offering them, you just have to do a little more looking around.