Sub prime lenders offer second mortgages to people with bad credit. Charging slightly higher rates for the higher risk level, sub prime companies help you access your home's equity. With so many lenders online, vying for your business, you can find better rates by shopping around. Even with poor credit, rates can be as little as .5% higher than traditional equity loans.

Higher Rates For Higher Risk

Sub prime lenders by definition deal almost exclusively with people who have scores 649 or less. They can even provide financing the day after your bankruptcy. For this increased credit risk, they charge rates anywhere from 5% to 12%. Unscrupulous lenders will charge even higher rates or expensive fees.

To find what is reasonable, start requesting rate quotes. Not only will you get an idea of market rates, but you can sift through the scammers too. When you request a quote, be specific with your credit standing. You can always request your credit score from a credit monitoring service or reporting agency.

Competitive Lenders Vie For Your Business

The internet has made the financing sector more competitive. With consumers clicking their way through financing offers, lenders can only stay in business by offering low rates and fees. A smart shopper will find these offers online.

Without having your credit score dinged by credit inquires, you can ask for general quotes online. By giving general information about your income, home's value, and general credit, you can get a good idea about rates.

Some sub prime lenders will also offer lower fees or rates by processing your application online. Financing companies save costs by working online, savings they can pass onto you.

Smarter Shoppers Get Better Rates

To make your rate search easier, start with a mortgage broker site. By submitting your information once, you will receive multiple offers. If you find some promising offers, you can follow-up. If you have time, research individual lender sites. They too can offer great deals.

Before signing any contract, make sure you understand all the fees and rates involved. An initial low rate can be an expensive loan if closing costs are high. Use the APR to find the truly best deals. Also factor how long you plan to keep the loan. Lower fees and higher rates may be a better deal for those who plan to sell or refinance in a couple of years.

Here are our recommended home equity and second mortgage lenders online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.