Bad credit mortgage rates are better than they have ever been before. (Unnamed Copywriting)

Bad credit mortgage rates are better than they have ever been before.

Mortgage rates for bad credit used to be incredibly high. It was very easy to get approved for a bad credit home mortgage, but you still paid for it through a very high interest rate. However, as the mortgage market has changed, so has that of the bad credit mortgage market.

The mortgage crisis has had a lot of effects on mortgage lenders and homeowners alike. What started with irresponsible sub-prime lending has had ripple effects across the economy and is now manifesting as record high unemployment rates, record decreases in home values, and record decrease in median home income. This factors have affected mortgage lenders and the mortgage lending world as a whole as well.

The majority of the lenders that were offering to refinance bad credit loans have, for the most part, gone out of business. This means that fewer people with bad credit have been able to get approved to purchase new homes. The problem is that for the banks that are left, there are also fewer available customers.

The government, as well as the lending world has done everything in its power to make it easier for people to get approved for mortgage financing. It is still harder than it has ever been for a borrower with bad credit to get approved for financing. But, due largely to government backed programs like the Department of Housing and Urban Development’s Federal Housing Administration, when someone is approved for bad credit financing today, the mortgage rates are the most competitive they have ever been.

It is easy to see this. Go to any website that has a mortgage calculator and plug in some numbers. Take the average interest rate for someone with great credit from two years ago, which was seven percent and plug that in for a thirty year fixed rate. Then compare that payment to the payment of what even a bad credit borrower can get approved from now, through the FHA program at five and half percent. On a loan amount of 100,000 dollars, the difference is 99 dollars, down from 675 dollars a month to only 576.

The difference is that the majority of bad credit lending occurs today through the FHA program, as opposed to the sub-prime and non-conforming loans of the past. These sub-prime loans would approve almost anyone, but the interest rate was directly rated to how low your credit score was. Almost anyone would get approved, but almost no one would have an interest rate that was anywhere close to the average national rate for a thirty year fixed rate.

With the FHA program, again, almost any credit score can be approved, but unlike sub-prime loans, a borrower must go the extra mile to convince an underwriter that they are a good credit risk. If they can pull this off, they are rewarded with one of the most competitive interest rates available to anyone.

Today’s mortgage rates are better than they have ever been before. And, unlike the bad credit lending of the past, these rates also apply to borrowers with less than perfect credit. Despite the extra work needed, these are definitely the best loans that have ever been for bad credit borrowers.