Saturday, February 13th, 2010 at
5:48 am
There are lenders out there who give what are referred to as bad credit mortgage loans, if you are experiencing financial problems, a situation that is common to many people everywhere. Possibly you recently just got divorced, lost your business, had large medical bills, or maybe you have had too many credit cards and now the balances are out of control. In all likelihood, things like this may have caused your credit rating and FICO score to drop. Sometimes setbacks happen in life, but there is hope if you still must get a mortgage to buy a home or for other reasons.
There are a number of reasons which contribute to poor credit, damaged credit or bad credit, all of them with almost the same effect as having no credit at all. When a credit check reveals a low score or a questionable credit history, it is more likely that lenders will reject your home mortgage application. So, if you cannot qualify for a regular home mortgage, bad credit mortgage loans come into play to rescue you.
There are many lenders and brokers willing to help people who want to refinance or apply for a home mortgage but do not qualify because of a poor credit history. These loans are usually more costly than regular home mortgages but you can switch to a better option when your credit and finances improve.
Buying a home involves a large disbursement so before you apply try to repair your credit first as much as you can. Although, there are companies which specialize in helping you out in this matter, never trust in organizations that promise to erase your bad credit, or create a new credit identity for you. Self help is your best aid for fixing your finances and your credit history and it is not that hard to achieve.
Bad credit mortgage loans are available for those people whose credit (FICO) score is less than 650, although most banks or financial institutions will let you know that you need a sub-prime loan. Due to the nature of their offer, most lenders are open to work with borrowers with challenged credit, to find the right mortgage and terms for them.
It is a good idea to begin to repair your credit by paying your bills on time, and reduce the number of credit cards that you carry. Remember that late payments are as bad as not paying, and have the same negative effects on your credit score.
Try at all costs to avoid bankruptcy, and do no expect to receive better bad credit mortgage loans, if any, after declaring your bankruptcy. For lenders it is a somewhat risky situation in their eyes to loan out money to someone with damaged credit. Obviously, what they are worried about is whether they will get their money back in case you cannot make the monthly payments. This is one of the reasons why you will have to pay a higher interest rate and possibly abide by other rules, in this situation. But, if you have a recent track record of paying debts back on time, to credit cards or other lenders, that will certainly help.
There are a large number of resources online for both learning more about credit repair, and finding the right type of loans, according to the borrowed amount and your capability to repay your debt. Also remember that in addition to higher interest rates, some creditors may require collateral or a co-signer to secure the deal.
After doing your research for bad credit mortgage loans, either online, in the newspaper, or yellow pages, contact at least five lenders to compare their offers and get the best option within the limitations of your financial condition.
By: Ken Black
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Saturday, February 6th, 2010 at
10:16 pm
There are lenders out there who give what are referred to as bad credit mortgage loans, if you are experiencing financial problems, a situation that is common to many people everywhere. Possibly you recently just got divorced, lost your business, had large medical bills, or maybe you have had too many credit cards and now the balances are out of control. In all likelihood, things like this may have caused your credit rating and FICO score to drop. Sometimes setbacks happen in life, but there is hope if you still must get a mortgage to buy a home or for other reasons.
There are a number of reasons which contribute to poor credit, damaged credit or bad credit, all of them with almost the same effect as having no credit at all. When a credit check reveals a low score or a questionable credit history, it is more likely that lenders will reject your home mortgage application. So, if you cannot qualify for a regular home mortgage, bad credit mortgage loans come into play to rescue you.
There are many lenders and brokers willing to help people who want to refinance or apply for a home mortgage but do not qualify because of a poor credit history. These loans are usually more costly than regular home mortgages but you can switch to a better option when your credit and finances improve.
Buying a home involves a large disbursement so before you apply try to repair your credit first as much as you can. Although, there are companies which specialize in helping you out in this matter, never trust in organizations that promise to erase your bad credit, or create a new credit identity for you. Self help is your best aid for fixing your finances and your credit history and it is not that hard to achieve.
Bad credit mortgage loans are available for those people whose credit (FICO) score is less than 650, although most banks or financial institutions will let you know that you need a sub-prime loan. Due to the nature of their offer, most lenders are open to work with borrowers with challenged credit, to find the right mortgage and terms for them.
It is a good idea to begin to repair your credit by paying your bills on time, and reduce the number of credit cards that you carry. Remember that late payments are as bad as not paying, and have the same negative effects on your credit score.
Try at all costs to avoid bankruptcy, and do no expect to receive better bad credit mortgage loans, if any, after declaring your bankruptcy. For lenders it is a somewhat risky situation in their eyes to loan out money to someone with damaged credit. Obviously, what they are worried about is whether they will get their money back in case you cannot make the monthly payments.
This is one of the reasons why you will have to pay a higher interest rate and possibly abide by other rules, in this situation. But, if you have a recent track record of paying debts back on time, to credit cards or other lenders, that will certainly help.
There are a large number of resources online for both learning more about credit repair, and finding the right type of loans, according to the borrowed amount and your capability to repay your debt. Also remember that in addition to higher interest rates, some creditors may require collateral or a co-signer to secure the deal.
After doing your research for bad credit mortgage loans, either online, in the newspaper, or yellow pages, contact at least five lenders to compare their offers and get the best option within the limitations of your financial condition.
By: Ken Black
Related Posts:
Monday, November 23rd, 2009 at
5:15 pm
The financing vehicles have been in place for several years now for a borrower using some creativity with a seller to make 100% financing possible. However, the real estate market had been so hot in many areas in the U.S. the sellers did not have to even entertain anything resembling creative financing. With a softening market, creative financing is back as a helpful tool to allow sellers to unload their properties as long as an over supply of inventory exists.
Harold and Laura had been renting a home in a suburban area for three years. They had been digging out from under a heavy debt load of medical collections. Laura was leaving work one day and a truck had crossed the line and pinned her in her small car for a half an hour until the jaws-of-life was used to extract her out from her crushed vehicle. With a broken hip, ankle, eye socket and fibula a long recovery ensured and Laura was not able to work for two years. The other driver was at fault, but any financial recovery was years down the road as the other insurance company was playing hardball.
In the meantime, with constant harassment for the out standing medical bills and the weight of credit card and installment debt that existed prior to the accident was just overwhelming. Harold had been working two jobs just to meet the basic family needs. Family help was limited and really wasn’t expected. Laura’s therapy had been going on for a year now and real progress was being made. Her employer had kept her job open as a customer service representative ironically at a credit card service center. The benefits were limited and very little of the medical bills and rehab had been covered. Harold and Laura had been seeking some financial advice from a local bankruptcy attorney. It was decided that with their level of income and huge medical bills that filing a Chapter 7 Bankruptcy action might be the best thing to do for mental sanity and cash flow. A Chapter 13-payback plan would be crippling for many years to come.
As the bankruptcy attorney explained to Harold and Laura that in his practice example after example comes before him where just bad things happen to good people and that there was no shame in taking care of their financial affairs in this manner. The rationalization process followed.
Two months before filing the bankruptcy, the insurance company was offering a small settlement based on an allegation that Laura may have temporarily been distracted by talking on her cell phone and thus reduced her reaction time. Rather than put up a long protracted fight Harold and Laura, for better or worse settled for an amount that just covered her payoff on her totaled car. They were relieved of that installment. Their attorney for the accident urged them not to settle, but with Laura’s eminent recovery and the stress of the whole ordeal, they grabbed what they could at the time.
Harold and Laura received their notice of the Final Discharge of their Chapter 7 Bankruptcy. All the collections for medical bills, non-secured credit cards and one major medical bill that had resulted in a judgement being awarded for the first responding hospital had all been wiped out. They excluded their family car from the Bankruptcy matrix (which names all the debtors), which still had a $6,850 balance with a $295/month payment remaining.
They also excluded a credit card that they had for years and had a low balance and a low monthly payment. This allowed Harold and Laura to maintain two trade lines and their on time rental payment of some $1,250/month outside the Bankruptcy action. Laura had now been back to work at her old job for two weeks. She was fortunate to take advantage of a car pool with a fellow worker who lived a half mile away.
It was like the world had been lifted off their shoulders. Now Harold and Laura had their rent, one car payment and a small credit card and their home utilities. The cell phone service had gone by the way side many months before.
Even through the most brutal times and the lowest of the low, Harold and Laura, as their custom, visited Open Houses after church every Sunday. It was always in the neighborhood and never more than two home visitations. It was Harold and Laura’s way to cope with the dark cloud that had beset them. During this process, they became familiar with a local Realtor who took a very personal interest in their situation. The Realtor, named Betty, knew they were not ready to do anything until some things had been handled.
At the most recent Open House visit, Harold and Laura shared that they had put their financial challenges behind them. Laura was feeling great and off all her pain medication. Betty raised the prospect and questioned them if she could figure out a way to get them into a home at a little more than they were paying in rent with little or no money out of pocket, would they have an interest at least in hearing more about it. Harold raised his hands with palms up and a shrug of the shoulders, and shared that it wouldn’t hurt to listen to some possibilities. The accident had caused a detour in the quest to own a home, but it had not killed their dream.
Betty set up a meeting with the Realtor’s in-house mortgage broker to discuss their options. A joint credit report was pulled and as Harold at the time made the most money his middle score was utilized to qualify for a mortgage. His middle credit score was right at 500. The mortgage broker went on to explain that they would qualify for an 85% Loan To Value mortgage. Due to their lack of a cash down payment, it was added, that the only way that they could use this loan option would be with a seller held second of 15% loan to value with the seller also paying up to 6% of the contract selling price.
This would then give them a 100% Combined Loan To Value (CLTV). The loan would need to be a Fully Documented loan with verification for employment and income. The mortgage broker felt like he could present Laura’s employment gap due to the accident and use her current income for qualifying purposes. Totaling up the income versus the debts, it was determined that Harold and Laura could buy a home in the $175,000 range IF the seller would offer reasonable terms on the 2nd mortgage. Betty piped in that she had been sitting on a listing for six months and the owner now may have an interest in holding some paper versus renting the property again and deal with the tenant challenges on repairs and upkeep. The home was close to their current residence.
Betty was able to work out the deal with reasonable terms on the second mortgage that would keep the overall monthly payment down at least for the first three years. As the mortgage broker explained, that should be plenty of time to establish a better credit history and qualify for a lower interest rate loan in two years. As an added bonus, the seller agreed to pay all the closing costs and prepaid expenses such as annual hazard insurance and tax escrows plus replacing a leaky roof. Harold and Laura moved into their newly purchased home putting all the travails of the past in the rear view mirror.
Sometimes bad things happen to good people. In this current real estate market, there are creative possibilities. It won’t last forever; the time is at hand for seller help and creative financing.
Dale Rogers
www.sellerhelpsbuyer.com
www.brokencredit.com
By: Dale Rogers
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