In reality mortgage loan requirements after a bankruptcy are basically the same as any other mortgage loan, except for perhaps the down payment. For the first two years after a bankruptcy it will be exceptionally difficult to find a mortgage loan that does not require a 50% down payment. After two years, if you have made efforts to improve your credit score, finding a mortgage loan should not be as difficult and the down payment requirement should be around 20%.

When searching for subprime mortgage lenders keep in mind that in most states mortgage brokers don’t have to be licensed and as such in many cases these brokers may have no idea what they are doing. Many will most likely not have your best interest high on their priority list.

Of course not all bad credit mortgage lenders are evil. There are those who genuinely want to help people out, build a reputation for themselves and in turn win referrals. If you are searching for a loan, research on your part is extremely important so you will be able to recognize a hack from an expert, a rip-off artist from a professional. Using referrals from friends, colleagues and neighbors is a good start.

While shopping around you don’t want to accumulate inquiries on your credit report. If you don’t give up your social security number they can not do a credit check. Most mortgage brokers will want a price quote first after which they will then begin the application process. If a broker does this the other way around and requires you to fill out an application that includes your social security number, then this is no longer shopping around, you are being locked in with a broker and will then be limited to the offers they alone present to you.

You are not alone, millions of people file for bankruptcy every year. After a bankruptcy, the best thing you can do is wait. Use this waiting time to petition and make corrections to your credit report. If after two years you have had some success cleaning up your credit report then go ahead and begin the search for the best subprime mortgage you can find. Even if your credit is still bad there are plenty of bad credit mortgages available.

A bad credit mortgage company relies on a credit score provided by one or all of the credit agencies to determining where a borrower sits on the line between high-risk and low-risk. Equifax, Experian, and Trans Union keep track of each persons credit history and give individuals a score derived by several factors. These factors include not only payment histories of each credit card and loan but also how many inquiries have been made to view the individuals report.

In the past mortgage companies would not touch someone with a score below 620. Today that number has dropped to 500 which is pretty bad. The fact that an individual is a higher risk gives the mortgage lender incentive to charge higher interest rates and demand that the borrower pay PMI, a form of insurance that guarantees the lender won’t lose out if the borrower defaults. Higher interest rates and payment insurance make bad credit mortgages a profitable venture.

Companies are doing so well in fact that they often offer incentives such as instant pre-qualification, easy application forms and instant approval via the internet. They are everywhere online. Websites can automate many of the processes necessary to the approval process which makes it a hands off job for the lenders.

Companies that offer bad credit mortgage loans definitely exploit the automation capabilities of the internet and some use unscrupulous tactics to reel in those would be borrowers who are either on the fence or just shopping around. Fear tactics such as a great deal that will only last for the next 24 hours (of course the same deal is there a week later).

If you are looking for a mortgage online, shop around, don’t be swayed by the scare tactics and read the fine print. It is also very important that you know what your credit score is. It makes sense to first put in some effort to do whatever possible to bring your credit score up as much as you can before applying. Bad credit mortgage loans are not all that hard to get but be forewarned, many of these bad credit mortgage lenders will try to squeeze whatever they can out of you with the justification that you are a higher risk to them.