Illness, a lost job or unforeseen emergencies can all affect your long-term credit and lead to the need for a bad credit mortgage company. Buying a house is a definite step towards improving your credit rating and so you want to choose the best bad credit mortgage for your needs. Here are a few tips to consider when deciding.

First, approach a mainstream lender. Even if you have experienced bankruptcy or think your credit is less than stellar, it never hurts to try. If one of these companies does accept your application your interest rate will generally be lower. If not, they may have a subsidiary or affiliated company that they can refer you to. However, if this is the case, you’ll want to shop around, as the subsidiary may not offer the lowest bad credit mortgage rate available.

You can also go to a mortgage broker. They will have access to a wide range of bad credit lenders and can help you find the best deal for your needs. As with a regular mortgage the interest rate is the most important thing to consider so going to a broker will allow you to compare rates from various lenders. Don’t forget to check for hidden fees though!

When dealing with bad credit mortgages you should be aware of predatory lenders. These companies prey on people that don’t have enough information or believe they don’t have any other financing options. Beware of a bad credit lender that makes first contact and aggressively sells its services to you. Predatory lenders make their money from fees and try to rush you through the process, even if it’s a house you can’t afford, so they get paid. Don’t fall for their promises of refinancing within a year for lower rates. If the arrangement consumes more than 30% of your monthly income, it’s too high. Do your research beforehand and know what are the common lending rates and fees for your area.

As a general rule, after three years with a bad credit mortgage, paying a slightly punitive interest rate, your bad credit rating should have been restored to good health. After this time has passed look into refinancing your mortgage through a standard lender and you should be able to pay competitive interest rates based on your new and improved credit rating.

Find Bad Credit Lenders Here
http://www.mortgage101.com/Directory/DirectoryServices.asp

Everyone in America is entitled to 1 free credit report from each of the 3 consumer reporting agencies (Equifax, Experian and TransUnion) every year according to the Fair Credit Reporting Act (FCRA.) These reports aren’t generated automatically which means if you want it, you have to request it. There are 3 ways this can be done.

Online – Although there are a plethora of ‘free credit report’ offers on line, there is only 1 government authorized website for getting your free credit report. It is www.annualcreditreport.com. Be careful to use the correct website address as there are some unethical companies out there that try to take advantage of the possible misspellings. If you go to one of these sites chances are you’ll end up pay monthly recurring fees for a membership that you didn’t want. Your credit report results are delivered immediately online.

By Phone – If you aren’t Internet-savvy, or just don’t want to deal with the hassle, you can call (877) 322.8228 to get your free credit report. You report will be processed and mailed within 15 days.

By Mail – This is the slowest way to go, but if it makes you feel easier you can mail your request to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You report will be processed and mailed within 15 days of the company receiving your request.

It’s up to you if you want to order all 3 reports at once or space them out. Keep in mind if you space the requests out you’ll be able to monitor your credit reports more often, say every 4 months, which is a better idea.

When you submit your request you will be asked to provide a variety of information. Having the following on-hand will make your process much smoother.
• Name
• Address
• Social Security number
• Date of birth
• Previous address (if you’ve lived at your current residence less than 2 years)

There are other circumstances in which you may be eligible for an additional free credit report. These include being denied credit, an insurance policy or a job based on credit. If this happens you must submit your request within 60 days. You are also eligible if you are applying for unemployment or receiving public assistance. Additionally Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey and Vermont have state laws that give consumers constant free access to their credit reports.

If you are concerned about requesting your free credit report because you are worried about the companies discouraging you or trying to collect more personal information, fear not. The FTC has laws requiring that the agencies make the request process simple, advertisement-free and as minimally intrusive as possible. Also, the agencies cannot ask for any information beyond what is necessary to process your request. So, go ahead and order your credit report. It’s free, easy and a good idea to see what it contains, especially in today’s world of identity theft.

IndyMac Bancorp (IMB) said last night the market for mortgage-backed bonds has become “very panicked and illiquid.”

American Home Mortgage (AHM) also announced last night it is closing most of its operations today with nearly 7,000 employees losing their jobs.

Yesterday, we blogged about Positive Carry, a 124-foot yacht that is now up for sale from former hot-shot mortgage trader John Devane of United Capital.

The great long-time investor John Templeton used to say look for points of maximum pessimism for investment opportunities. The mortgage market is definitely at one of those points today.

However, this might be one point of maximum pessimism investors may want to avoid. Mortgage-backed securities are typically purchased by institutions who borrow to purchase these securities. The ability to borrow is now gone or greatly reduced meaning a lot less buying power in this market. This also means housing prices are going to get a lot weaker than anyone anticipated.

Both the housing and mortgage markets are two points of maximum pessimism investors can afford to miss for now. This is one leverage mess that will take time to work out.

the 30-year fixed-rate mortgage (FRM) averaged 6.68 percent with an average 0.3 point for the week ending August 2, 2007, down from last week when it averaged 6.69. Last year at this time, the 30-year FRM averaged 6.63 percent.

The 15-year FRM this week averaged 6.32 percent with an average 0.3 point, down from last week when it averaged 6.37 percent. A year ago, the 15-year FRM averaged 6.27 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.29 percent this week, with an average 0.5 point, down from last week when it averaged 6.30 percent. A year ago, the 5-year ARM averaged 6.27 percent.

One-year Treasury-indexed ARMs averaged 5.59 percent this week with an average 0.5 point, down from last week when it averaged 5.69 percent. At this time last year, the 1-year ARM averaged 5.69 percent

American Home Mortgage Investment Corp (AHM.N), a large U.S. mortgage provider, said on Tuesday it can no longer fund home loans and may liquidate assets, putting its survival in doubt.

The Melville, New York-based real estate investment trust retained Milestone Advisors and Lazard to help it evaluate options and advise “with respect to the sourcing of additional liquidity including the orderly liquidation of its assets.”

Shares of American Home, which had not traded since Friday, sank $9.15, or 87.4 percent, to $1.32, after the announcement. They traded as high as $36.36 in December.

American Home’s announcement shows how concerns about credit quality and homeowner defaults have spread beyond subprime lenders, which lend to people with weaker credit, to lenders that make higher-quality loans.

“The chances are pretty high that the company either goes bankrupt or materially restructures, leaving little value for shareholders,” said Bose George, an analyst at Keefe Bruyette & Woods Inc. in New York.

“The business model of non-bank, mortgage lenders is challenging, and may be unstable, because they are so dependent on the willingness of the capital markets to fund operations,” he added.

Mary Feder, a spokeswoman for American Home, did not immediately return an e-mail seeking comment. Her telephone mailbox was not accepting messages.

The company also did not return calls on Monday, after it delayed paying a scheduled common stock dividend and announced “major” writedowns.