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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Tuesday, February 2nd, 2010 at
6:28 pm
Mortgage companies are sometimes reluctant to award a home loan to those with bad credit. There are however, mortgage lenders who specifically work with someone who has bad credit. A bad credit mortgage can also be known as a poor credit mortgage, adverse credit mortgage, sub-prime mortgage and a non-conforming mortgage.
A bad credit mortgage is different in many ways from a traditional mortgage. Getting approved for bad credit mortgage loan will most often mean that you will be paying higher interest rates, higher closing cost fees, and a larger down payment. These things are why it is very important to shop around and do your research to make sure you are getting the best rates that are possible for your situation. There are many mortgage lenders that are willing to provide mortgage loans to those with bad credit. There are also many lenders who will still provide a mortgage loan with low interest rates depending on how bad your credit is.
Mortgage lenders who lend to those with bad credit most often love to get those who have not researched the market to find what is offered and find the best deal. If you do not shop around and do your research, you most often will be taken advantage of and not receive the best possible deal. Because of your bad credit rating and income status you may find that it will be best to allow a broker to work to find your best loan. If so, use much caution and please make double sure that the broker can be trusted. Using a broker can make you very vulnerable to increased charges, fees and interest rates.
Some of the mortgage lenders who help those with bad credit will attach a pre-payment penalty to the contract. This would mean that you would have to keep the loan at least for the pre-payment penalty length of time. For example, if your loan had a pre-payment penalty of 1 year, you would have to pay the high interest rates for at least 1 year before paying off the loan. Always research and find the loans with the shortest pre-payment terms or no pre-payment terms so you can work toward paying off the loan quicker without paying a penalty.
You will need to decide whether or not you want an interest only payment or a payment that consists of both interest and principal amounts. An interest only payment is usually a lower payment and works better for those on a tighter budget. Paying an interest only payment will not decrease the loan amount and most often will increase the balance because you are not paying any on the principle.
Most people choose the payment that includes both the principle and the interest. This type payment helps to decrease the amount you owe because part of the payment is being applied to the principle amount and not just the interest. The payments may be a little more, but may be more flexible than interest only payments and allows you to decrease your debt at the same time.
You will also need to decide on what type of interest you will want to pay. There is a variable interest rate and a fixed interest rate. With variable interest rates, your monthly payment will increase or decrease based on what the national interest rates are at the time of your payment. A fixed interest rate means that your interest rate never changes; therefore your payments would remain the same from month to month throughout the term of your mortgage loan.
When getting ready to apply for a mortgage loan, there are some things that you will need to have on hand. You most likely will need the last couple of your paycheck stubs, your W-2 and last year’s tax returns. The lender will also want to know about your assets. Make a list of your checking and savings account balances, stocks, life insurance policies, real estate, vehicles and any other item that would be considered an asset. It is also very important to know what your credit looks like before allowing the lender to pull the information. Therefore, if there is an error on your report, you can address it and get it corrected ahead of time.
Mortgage lenders look at several things when you apply for a mortgage loan. They will view your credit history, employment history, your income and how much debt you currently have. The amount of cash that you have on hand is also very important. If you have enough cash on hand to pay a large down payment, the lender may consider you less of a risk because you will have more invested in the property and will be less likely to default on the loan.
The most important thing to do when trying to find the best mortgage loan for your needs, is to make sure that you will be able to make the payments and make them on time. Doing so will improve your credit over time!
For More Information on this and other Credit Issues, please go to www.Bad-Credit-Options.com
By: Teresa Davis
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