Jan
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Bad Credit Mortgage
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Believe it or not, you don’t have to have perfect credit to get a mortgage.
Funds for borrowers for bad credit mortgage loans come from Wall Street type investors rather than banks. Local and neighborhood banks and credit unions are usually too conservative in their business practices to participate in bad credit or subprime mortgage lending.
Most neighborhood banks do not offer mortgage programs for bad credit borrowers. An experienced mortgage broker is often the best source for Bad Credit or Subprime loans. Most mortgage brokers have business relationships with mortgage bankers that only specialized in mortgage loans. Unlike neighborhood banks, whose core business operations focus on checking and savings accounts, these subprime mortgage lenders’ business model focuses only on making mortgage loans.
A Bad Credit Mortgage can be the first step in fixing your credit. It’s like a fresh start to take cash out to pay of credit card bills and perform any other debt consolidation, getting lower payments overall each month and reducing them all into one low monthly payment, which is easy to remember to pay on time each month. Paying your mortgage on time each month will improve your credit scores and you can eventually refinance your bad credit mortgage once your credit has improved and qualify for a low fixed rate or powerful pay option arm a year or two down the road.
Most of the Banks will lend on a borrower if you have above 500 credit score. There are a handful of banks/hard money lenders that will lend on sub500 fico.
While it is true that a subprime loan will carry a higher interest rate. It does not mean you are stuck with the loan forever. Hopefully you will improve your credit score to the point where you can refinance at a more favorable rate.
These types of loans are usually called “subprime” loans out in the market place. Really all it means is that is it a loan for those who have had some financial struggles in their life. Just because you’ve missed a few payments does not mean you can’t qualify for a loan.
There may be a higher interest rate or fees associated with a subprime loan, due to the higher risk the lender is making.
The mortgage industry has evolved over time allowing more options for getting approved for a mortgage. Even if you have “BAD CREDIT”. Bankruptcy?, Foreclosure?, Late payments? Defaults?, Collections?, , there is still a program out there for you. Do not assume you cannot qualify. It only takes a few minutes to apply. Find out for sure if you can qualify or not.
The rapid growth of the mortgage industry has led to the creation of programs that can help those with even the most challenged credit situations.
Having poor credit does not disqualify you from getting a mortgage, it only increases the risk that a lender might have in giving you a loan. Talk to a mortgage professional if you are unsure about your ability to obtain a mortgage.