Sunday, March 28th, 2010 at
4:10 pm
Bad Credit Mortgage Loans
Mortgages are one good way of securing your home Loan. However not everyone can opt fort mortgage loans or not everyone can get a good deal on mortgage loans. A number of people bear bad credit history due to their unnecessary spending in the past and not paying the bills on time. For such people it was very tough to get a mortgage loan until the financial institutions introduced bad credit mortgage loans which are specially aimed and designed for people who have bad credit history.
Terms and conditions of Bad Credit Mortgage loans:
The idea of bad credit mortgage loans was not borne because of compassion but was an initiative towards making profit from the odds.
Taking this strategy in mind and the desperate need of people having bad credit for mortgage, bad credit mortgage loans were designed with a higher interest than normal to make profit.
The tenure of bad credit mortgage loans is usually the same like in conventional mortgage loans.
The golden down payment rule!
The golden down payment rule remains the same in bad credit mortgage loans too that is the higher your down payment is the lower will be your tenure or monthly installments. Usually the down payment is around 10% of the total loan amount however if the consumer wishes he can make a higher down payment.
Your credit history counts…
Having a bad credit history is not just a reason to opt for bad mortgage loans. The down payment of your loan amount is largely dependant on your credit scores. For instance, if you have a credit score lesser than 490 then your down payment becomes approximately 30% of the loan amount. The higher your credit scores the lesser down payment you’ll have to pay.
By: Amasch McAndrew
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Sunday, March 7th, 2010 at
3:57 am
Unfortunately, in today’s America too many people have found themselves in a position of having less than perfect credit. On the other hand, many lenders are now using more lenient lending guidelines than in the past to approve borrowers with bad credit for a mortgage. As a result, even if you have bad credit, you may still be eligible for a home loan that covers a full 100% of the financing.
Below, I’ve listed a few ideas that may help you get approved:
Online Mortgage Lenders
Remember, the lending industry is very competitive. Lenders are always looking for new customers and virtually all loan officers work on a commission and so if the loan doesn’t go through they don’t get paid. As a result, it’s in their best interest to do whatever it takes to get you a loan – regardless of how bad your credit is.
Many online mortgage lenders specialize in bad credit borrowers and by contacting multiple lenders you will clearly increase you odds of not only getting a loan but ensuring that you get the best interest rate and loan terms possible.
Tip – Bad credit mortgage lenders have higher interest rates than traditional lenders that only loan to borrowers with good credit. As a result, it is advised that you survey the market well in advance, so that you may look for various bad credit mortgage packages and have the time to compare and choose the one that fits your current situation and budget.
Credit Report – Make Sure It’s Correct
Your bad credit may not be your fault. Mistakes by the primary credit reporting agencies do happen and so it’s always a good idea to get a copy of your credit. Request a copy of a tri-merged credit report from every lender you apply for a loan from. The reason you want a tri-merged credit report is because all loan decisions are based on the middle credit score and so if you only get a credit report from a single credit reporting agency it won’t accurately reflect you credit score. Plus, any discrepancies may only show up on one or two bureau reports and so you need a full credit report to verify that there are no mistakes. Of course, if you find an error make sure you dispute them immediately.
You may also want to check for old negatives. If you dispute these negative items, you may be able to get them removed from your credit report. Sometimes collection agencies have moved your information around so much that the records are a mess. They may not even make an effort to challenge your dispute.
Cleaning up your credit report can quickly improve your credit, which will in turn increase your chances of getting a mortgage that has lower rates and better loan terms.
Tip – Bad credit mortgages are a kind of secured loan which is usually secured against the house that you buy with the loan amount.
Interest Rates
Interest rates are constantly changing. Although they don’t bounce around quite as much in the Subprime market as they do in the retail (good credit) market they do and can change quite a bit. Therefore, pay attention to interest rates to determine when the best time is to apply for a loan.
Tip – For options in finding the best lender for you, check out the links below.
By: Shelby Ryan
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Saturday, February 6th, 2010 at
12:06 am
Getting a mortgage with bad credit is possible but you need to be extra careful in choosing a lender. You need to be prepared to pay higher fees than your good credit counterparts. You also need to do a lot more due diligence before you sign on the bottom line. Just because you need a bad credit loan doesn’t mean you have to settle with extremely high interest mortgage loans. Here are practical tips on how to choose a bad credit mortgage:
* Assess your financial situation carefully. Before considering applying for a bad credit mortgage, think about how a new loan can affect your financial situation. Have you made plans on how you’ll be able to keep up with your mortgage payments? Are you sure that you are prepared to take on a new responsibility?
* Compare rates. It’s important to choose from several lending companies before choosing a particular lender. Don’t just compare interest rates but compare all costs involved in your loan. Although it is expected that bad credit mortgage loans do come with higher interest compared to standard mortgage, you can still find a company that offers reasonable rates. Use the internet to shop around for possible lending companies more conveniently.
* When shopping for your home loan, talk to your potential lender before giving them your social security number. Pull your credit yourself and fax it to these lenders and ask them based on what you have sent them what the rate, term and fees will be. Let them know that you understand they will have to pull your credit later if you decide on accepting their loan. Try to limit the number of pulls to your credit as much as possible.
* Watch out for predatory mortgage lenders. Many of the people facing the loss of their home are victims of predatory lenders. These lenders are on the look out for people with bad credit and will take advantage of you if you let them. Don’t let mortgage predators take advantage of you. Read the fine print on any loan documents you receive. The purchase of a home is a HUGE step. If you have questions, ask, if you don’t feel right about the lender, get up and leave.
* Be careful with adjustable rate mortgages. Keep in mind that adjustable mortgage loans may unexpectedly rise in the middle of your payment term. See to it that you are aware of the loan’s life cap and that it is clearly included in your contract.
* Ask for a copy of Good Faith Estimate. The good faith estimate should be handed to you days before the actual closing takes place. The good faith estimate includes the fees involved in your loan that you will be paying your lender.
* Inquire how much is your down payment. Bad credit mortgage loans require a down payment. Make sure that you are aware of how much down payment is exactly needed before accepting the loan. Watch out for last minute changes. Its not unheard of that at the signing table these predatory lenders may say, wow you didn’t quite qualify for this loan amount but to help you out, since we are here at the closing table, we have approved you for a second mortgage. This tactic works for the lenders because you are so excited about getting into your new home that you say ok, I can afford the additional payment. Unfortunately you didn’t look closely at the rate and term on this second. I’ve seen some second mortgages that adjust monthly.
* Negotiate with your lender. Even though you may have bad credit, don’t be afraid to negotiate with your prospective lender. Lending companies also face tough competition in the market and although some lenders may refuse to negotiate, there is no harm in trying.
Remember that a mortgage loan involves what will become your family home. By failing to pay, not only will you ruin your credit but put your family into a severe strain, and possibly make them homeless. Therefore, if you think are not financially ready, then it’s better to wait until you gain more control with your finances. In the meantime, you can work on improving your credit. Pay your debts and be timely in your payments. Avoid incurring new debt and limit the use of your credit cards. Set aside some savings for your mortgage loan down payment. This will help you be more prepared when you finally apply for your mortgage.
By: Liz Roberts
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