Get mortgage bad credit
Bad credit problem and looking for a mortgage.Dont worry you are not the only one.Everyday there are hundreds of people who face the same problem of bad credit and rejection from lenders because of this problem.However, there are still many lenders that approve people of these mortgage loans despite their bad credit.
With the holiday season having come up the interest rates are still down and you can take the advantage of this and apply for a bad credit mortgage to get the best rates .Since you have bad credit you would be offered a rate higher than the usual rates but still it would less in comparison to when the rates are high and having a small decrease in the rates can help you save a lot of money.
Think before you act
Before you apply for bad credit mortgage loans consider your financial situation.Check whether you are in a position to take a loan and would you be able to pay it off on time or not.Taking a loan and then unable to pay it off would only worsen your credit score.Hence it is advised that you first check your finances and then consider applying.
Next get your credit report from any of the bureaus and check whether all your payments towards other accounts have been reported or not. Also make sure that if there are any errors you get it corrected.A small correction in your report can help increase your credit score by 10 points and you can qualify for better interest rates.
If you are taking a mortgage to buy a house, then the lender would ask you for a down payment.This down payment amount can vary from 3-5% but since you have bad credit you would have to shell out more money.Make sure that you have an agreeable down payment amount ready .You can arrange for this down payment through family members or take from your retirement savings accounts or from your 401K savings .Remember, more the down payment lower would be the interest charged on the mortgage.
How does the lender approve?
Earlier it was thought that credit rating was the only basis on approving a mortgage loan application.But let me tell you this is important but definitely not the only basis.The lender takes a number of things into consideration while giving out these loans.
Having a good score is definitely a plus point and with the help of a good score you can qualify for lower interest rates but lenders even approve people with credit problems.Lenders typically take into consideration your income and the stability of your employment. If you have a decent income then the lender can consider you for approval.
Besides, this if you have any assets then you should inform the lender about them so that the lender can get a positive point to approve your loan .If you are taking a second mortgage or home equity mortgage then the lender would typically consider the equity in your house before approving the loan.
When you go to apply for the bad credit mortgage you should go prepared with your salary slips, tax return forms, bank statements, property appraisal papers etc. This would make the lender agree that you are aware of the process.
When applying for these loans it is advisable that you provide a letter to the lender determining the cause of your bad credit and assure him that you would be paying off your loan on time.
Read before you sign
Before you sign up for the bad credit mortgage it is important that you read the loan agreement carefully.Check all the rates and the closing costs that you are being charged. Make sure that there are no hidden costs associated with the loan.
Before you sign the agreement the lender would propose different interest rate options like fixed rates, variable rates, balloon payments, interest-only payments.Make sure that you decide the type of interest that you wish to have after a lot of consideration.
Also check for the pre-payment penalties associated with the mortgage loan.Usually it is not advised to take a bad credit mortgage loans that has 2-3 years of pre-payment penalty because this makes it difficult for the borrower to refinance the loan at a later stage.
Lenders for these loans
When applying for bad credit mortgage loans you can either apply with sub prime lenders or with conventional lenders .Sub prime lenders specifically deal with providing loans to people with bad credit but they charge high interest rates.
You can also consider taking the help of a mortgage broker who helps people with credit problems in qualifying for these loans.A mortgage broker would have access to a number of lenders who can approve your application.
Below are mentioned a few brokers and lenders.
Refi Rescue:
They help people with credit problems in getting loans. You can contact them at 4805 Independence Parkway, Suite 250B, Tampa, FL 33634 ; Phone: 888-447-7314; Fax: 888-234-2345;.
Adderson & Co.
They provide bad credit mortgages. You can fill out their online contact form for more details on their products.
Lula Bullale, EA Bankers Realty:
They offer some of the best rates on mortgage loans for people with bad credit. You can contact them at 627 Silver Spur Road, Suite 202, Rolling Hills Estates, CA 90274 , Direct: 310/413-3547, Fax: 310/832-8917; .
Profolio Home Mortgage Corporation:
They help people with credit problems in qualifying for a mortgage loan.You can contact them at 2500 CityWest Blvd., Suite 525, Houston, TX 77042 ; toll free number: 800-889-2564 fax number:713-977-2732.Other Articles
