Sunday, May 23rd, 2010 at
3:26 pm
In recent years bad credit mortgages have been readily available, however in 2009 that is no longer the case. With the housing market on the decline, so are the bad credit mortgage operations. Once easily obtained bad credit mortgages are now on a rapid decline and looks to not improve in the year 2009.
If you have bad credit, meaning a credit score of less than 700 obtaining a mortgage might be extremely difficult for you. Some smaller banks and credit unions will still offer a bad credit mortgage before the large nationwide banks will. A bad credit mortgage loan may be attainable as an adjustable rate mortgage and open up the possibility of a refinance in the future, when your credit score has increased. The adjustable rate mortgage might entail a balloon payment, private mortgage insurance and or higher interest rate than the prime rate.
If you are searching for a bad credit mortgage first you should view your credit report. An inaccurate credit report is often the culprit of low credit scores you can work with the credit bureaus to repair or remove any inaccurate information located in your personal file. Next prepare your documents that will be required to obtain a bad credit mortgage, typically it is 2 years worth of tax returns, discharged bankruptcy papers, marriage certificates and/ or divorce decrees, your current liabilities and income verification.
Contact a professional mortgage broker he or she will be on your side during your entire loan process from finding the right lender, filling in the paperwork and letting you know if a bad credit mortgage is an option for you and your situation. Be prepared to be turned down, but you really won’t know unless out try. Research your location, your current income and your credit worthiness take steps to improve your credit scores to ensure that you have the option in the future to obtain a home mortgage at a lower interest rate.
By: Derek Farley
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Wednesday, May 19th, 2010 at
11:36 pm
Mortgages for those with adverse credit have advantages that conventional mortgages don’t. The prime advantage is that they are easier to qualify for, even with a bad credit history. Sub-prime mortgages also allow you to build wealth with your home purchase. And they have fewer hurdles, such as not requiring PMI.
Start Building Wealth
Bad credit mortgages allow you to start building equity wealth even if you have a bankruptcy or foreclosure in your past. With rates only a couple of points above conventional rates, you can get into a home with no or little down. For about the cost of a rent payment, you can enjoy tax deductions and home ownership.
Without waiting for your credit score to improve, you can buy a home at today’s prices. Even though no one knows for certain what prices will be in the next couple of years, more than likely they will be higher. You can see that appreciation by buying a home now.
Forgo Private Mortgage Insurance And Other Hurdles
Unlike conventional loans, you don’t have to carry private mortgage insurance with a sub-prime loan. So even with a down payment of less than 20%, you don’t have to worry about premium costs.
Sup-prime lenders are also more flexible with their requirements. Your cash assets, income, and credit scores can be less than favorable, but you can still get a mortgage. You can also choose more flexible loan terms of interest-only, jumbo, or adjustable rates.
Finding An Adverse Credit Mortgage
With more and more financing companies offering sub-prime lending, it’s easier than ever to find an adverse credit mortgage. A quick search online will yield hundreds of opportunities. Sifting through those results can produce some very favorable financing offers.
If you are overwhelmed with the choices, start with a mortgage broker. They sort through the plans to present you with the best selections. In some cases they also offer special deals, not found elsewhere.
Don’t worry about getting approved or not. Focus on getting the best rates and terms. Ask for loan quotes that include closing cost estimates to make comparisons. Also be willing to negotiate more favorable terms, especially to lower caps or fees.
By: Carrie Reeder
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Tuesday, March 30th, 2010 at
6:35 am
Whether you’re in the market to purchase your first home, or simply refinancing your existing home loan, bad credit can cause some troubling headaches throughout the entire lending process. Have no fear, for modern day brings with it sub-prime lenders that specialize in bad credit mortgages, assisting those who suffer from a blemish or two on their credit reports, a bankruptcy, foreclosure, auto repossession, or anything else that could easily hinder a conventional loan from a traditional lender.
One key factor in bad credit mortgages is the down payment you provide or the amount of equity you have in your home. This is referred to as the LTV or Loan to Value ratio- how much your home is worth compared to the amount financed. The lower the ratio (loan amount), the lower your interest rate, fees and monthly payment will be. The higher the loan amount, the higher your interest rate, fees and monthly payment will be. This is because you are considered a risk, so a large loan will cost you more than the average consumer.
PMI (Private Mortgage Insurance) is another factor in a bad credit mortgage, especially for those who have a higher LTV (as explained above). This insurance differs from your hazard insurance, as that’s bought from an insurance agent to protect your assets in case of fire, break in, etc. PMI protects the investors in your home incase you default on your loan payments and the house is sold at auction. PMI will cover any gap between what the home resold for and your mortgage balance, therefore protecting the investors.
Sometimes, in order to get you a lower rate on your mortgage, a sub-prime lender may offer you a “points” option. Points are typically equal to 1% of your financed amount, and are considered “prepayments of interest” that will reduce your interest rate. Sub-prime lenders may charge you upwards of 5 points or more to get you into a better loan program. More often than not, you can roll the points (and the closing costs) right into your home loan so you don’t have to bring money to the closing.
Typical mortgage rates can be as much as 3% higher for borrowers with bad credit than those with sparkling credit for obvious reasons, so you shouldn’t get too shaken up about the rates and fees. A bad credit mortgage should be considered a “temporary fix” to allow you to get caught up on some bills while ironing out your credit. You’ve worked hard for your house; it’s more than just walls, a floor, a roof and some furniture- it’s your home! Allowing it to work for you simply proves the valuable resource that homeownership is.
By: John Cassidy
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