A bad credit home loan is a loan for a person who has a prior bad credit record. Even in these tough economic times some lenders offer bad credit home loans. They do so knowing full well their loan is secure because the loan is secured by the mortgage on the home and sometimes has an additional government backup.

Getting a bad credit home loan is an opportunity for those who have a bad credit rating to drop out of debt and start on the road to good credit records. By getting a bad credit home loan any borrower can lower other monthly payments too. The person getting the loan can consolidate all their debt into one payment. This payment usually enjoys a much lower interest rate than other loans on existing debt — especially credit card loans.

Taken all together, consolidating all debt obligations and paying them off in one fell swoop is a major step toward credit repair. Moreover, if the borrower can keep up the payments on her or his second home loan for about six months to a year that diligent borrower will see a remarkable change in their credit score.

The options that are most popular for bad credit home loans are cash out mortgage refinance and home equity loans. Both options allow the borrower to cash in on any equity already paid into the home mortgage and use it to get out of debt. Dealing online with a mortgage company is a good way to avoid hearing a bank associate’s salesmanship. In person, bank associates do a lot of talking to confuse the borrower or to sell extra products the borrower might not really need. Also working over the net makes it easier to compare offers from a variety of lenders. This makes it easier to avoid being cheated.

These are some important points to be aware of when researching and applying for a mortgage online:

By reading many websites of many lenders you can gain a free and valuable education. Become aware of various types of financing and be informed and up to date on fees and current lending rates.

Once you choose to apply to a specific lender make sure to read all the posts about loans and payments on that lender’s websites. Believe it or not, nowadays most lender make much of their information easy to read…to a point.

While applying for an online quote, do not opt for a generic estimate. Based on your actual monthly income and outgo, send the lender detailed information to get back a real quote that is as accurate as possible.

Before making a final decision find out all the fees and costs: including the closing fees, application fees, interest charged, amortization and loan fees, and any other charges.

While waiting for an answer from the lender follow up your application with weekly phone calls to make sure things are moving along on schedule.

If you are successful getting a bad credit home loan, plan to refinance in about three years. If you’ve made your payments you should be back in good credit standing by this time. Refinancing will reduce short term debt and maximize your future credit rating.

Even in these difficult financial times there are lenders who want to make home loans. And some lenders are in a position to make loans under many circumstances to people with previous bad credit records. The final result could be a win-win. The lender makes a good loan and some profit. And the borrower has a new home and proof that past problems have not stopped them from being solid citizens.