Mortgage loans with bad credit
When people start hunting for their house most of them are unaware that they would come under the category of bad credit.Yes, there are a number of people who suffer from credit problems and it is estimated that on out of four people are victims.
If you are for a look for a bad credit mortgage then it is important that you have information about what are these loans and how can you obtain them. First of all it is important to understand that these mortgages are also known by different names like poor credit mortgage, adverse credit mortgage etc In the loan market they are known as sub-prime mortgages or non-conforming mortgage.
Difference between traditional and bad credit mortgage
When it comes to differentiating between these mortgages the first is the interest rate.Bad credit mortgages come with a higher interest rate as compared to traditional mortgage.
Second is the down payment, people with bad credit are required to pay a higher down payment as compared to people with good credit.There are times when people with good credit can qualify for a mortgage with minimal amount of down payment or no down payment at all.
When you apply for a bad credit mortgage loan it is important that you compare the closing costs and go through the terms of the loan carefully so that you are aware of what you are signing up for.
You should make sure that you would be able to make the payments towards the loan in time so that you can improve your credit rating.
Getting approved of a bad credit mortgage
When you apply for a bad credit mortgage you would see that there are a number of lenders that are ready to provide you with these loans There are many lenders who would consider you for a lower rate mortgage as compared to the usual bad credit interest rate if you have small debts or have very few CCJs.
But when you apply for these mortgages you should be well aware that you would be offered higher interest rates as compared to the usual mortgage However, the rates would vary from one lender to another hence you can qualify for a lower rate depending upon how bad your credit is.
The lender usually checks the following things to determine while giving out the bad credit mortgage loan :
Your employment status and income: Keep your salary slips of this and the previous jobs and the W-2 forms or tax returns ready.
Your assets: get the details about the bank balance of your checking account as well as savings accounts. Also keep the details about stocks, money market accounts etc ready if you have any.If you are a holder of a life insurance policy determine the amount.Keep a list of personal property like real estate, vehicles etc.also ready.
Your previous debts: Check your credit before allowing the lender to check it. If you find any mistakes bring to the notice of the bureaus
Paying back your bad credit mortgage
The major issue that lures around people with bad credit is how are they going to pay back their mortgage.This question has different answers depending on your financial situation. When you take such a mortgage it is important that you decide in the beginning whether you would be opting for an interest only payment or an interest and principal payment.
If you are financially not very stable then it is advised that you go in for an interest only payment as this would keep your payment low and you can easily meet with the payment.However, such a deal can provide you only with a short-term relief. When you see it on a long-term basis you would see that you are not paying off your mortgage and the debt accumulates.
This is the reason why most of the people opt for interest plus principal payment, as you would be making payment towards both interest as well as the principal.This can prove to be flexible and you would be getting rid of your debt on the same time.
Once that you have decided on the type of repayment it is advised that you also think about the interest rate that you would prefer to have.
You can either opt for a variable interest rate or a fixed interest rate. With the variable rates your monthly payments would vary with the variation in the national interest rates and with the fixed rates your rates would remain the same throughout the term of the mortgage loan.
When these loans are handled properly they can help you improve your credit score. It is hence advised that you keep your payments on time so that you can put your credit rating to the normal track.
Some of the lenders for bad credit mortgage loans are mentioned below:
Equitable Mortgage Group:
They offer all types of mortgages. You can contact them at 7305 Baltimore Avenue, Suite 207, College Park, MD 20740; phone: (301) 864-5600, Fax (301) 927-2211, Toll-Free 1-888-428-4511,
Professional Mortgage Partners Inc.:
You can pre-qualify for their loan and be assured. You can contact them at 524 W. State Street, Suite C; Geneva, IL 60134; Phone Number: +1-630-485-2205; Fax: +1-630-485-2206 for more details.
Texas Capital Mortgage:
They have a number of financial programs for their customers. You can qualify for an APR starting from 6.00% but with an acceptable down payment amount. You can contact them at 28 FM 1960 West - Houston, TX 77090; Office Phone 1- 866-433-0500 toll free Fax: 281-537-8502.
E-Loan:
They provide you with bad credit home loans. You can contact them at 6230 Stoneridge Mall Road, Pleasanton, CA 94588, Main Phone: (925) 847-6200, Main Fax: (925) 847-0831.Other Articles
