If you are one of those affected by the economic downturn with bad credit or late payments then you may be wondering if you can even quality for mortgages for people with bad credit. Often, people don’t apply for mortgages and spend years paying rent and putting money in someone else’s pocket because they think that they cannot get mortgages with bad credit. The truth is somewhat different, but there are things that you should be aware of before you begin shopping for a bad credit mortgage loan.

First, you’ll want to find out exactly how bad your credit is. Bad credit mortgages, unlike conventional home loans vary greatly in interest rates and such, depending on factors like your down payment, your stability, your debt to income ratio and of course, your credit score. If you are wondering what sort of mortgage you can quality for, whether a regular mortgage or one that is especially for people with bad credit, then the first thing that you’ll need to do is obtain a copy of your credit report. If you haven’t seen your credit report, you can obtain one free each year at www.annualcreditreport.com.

Generally, someone who qualifies for a conventional mortgage will be someone with a credit score above 620. If you have a credit score above 620 or even close, then you should apply at regular mortgage lenders, and with the right down payment, with a history of stability at one address and job, your approval is nearly certain. If your credit score is near 620 or somewhere in the five hundreds then you may want to do some credit repair before you apply for your mortgage. If this is simply not possible then there are bad credit mortgage loans available.

Mortgages for bad credit are also called subprime mortgages, but you will generally not hear your mortgage lender refer to them as such. Since this is a turn-off word for many customers, many will simply use the word mortgages or other terms and you will not know if you are dealing with a subprime mortgage lender unless you specifically ask. This is important because the interest rates and terms will vary from mortgage lender to mortgage lender, especially in the case of those offered to people with bad credit and you’ll want to know if that is what you are dealing with.

To find a good mortgage loan, even if you have bad credit, do some research on what conventional mortgage loans offer as far as terms and what the prime interest rate is. If you know these things then it is much easier to determine whether or not the bad credit mortgage that you are looking at is worth it. Try to find a loan for your home that is as close to conventional terms and interest rates as possible, and ask your lender what would bring you from the subprime category to being offered the regular interest rates. It may take just a few months work on your credit to get the interest rate you want.