Bad Credit Mortgage – It Could Be Easy
Getting a bad credit mortgage is easier to get then you might think. If your credit score is as low as 600 you may still be able to qualify. You will still pay a higher interest rate than you would if you had perfect credit but with the current interest rates as low as they are you will still get a pretty sweet deal.
If you have known for a while that you have wanted to buy a house and have planned well and now have a down payment in place, you will have an easier time of convincing the bank that you are not as much of a risk as they might have originally thought.
Having a down payment of up to 20% of the list price of the house will definitely improve your chances of getting approved for that bad credit mortgage and might just chop a couple of points off the interest the bank was thinking of charging you.
If the bank does not have to loan out 100% of the list price of the house they will probably approve you without even blinking and eye. If they only have to loan out 80% of the price of the house then should you happen to run into trouble and they have to foreclose they will have a better chance of recovering some, if not all, of their money.
Conversely if they loan you 100% of the list price of the house they take a big risk of losing it all if and when they have to foreclose on you. So, come up with up to 20% and the bank will love you long time.
Just telling the people at the bank that you are a responsible person will not cut it. You will have to prove it. How? Well, how long have you been working at your job? Have you had a long standing relationship with the bank you are working with and they can see by your records that you have been good with your money and not incurred a lot of overdraft fees and such? Have you lived in the area a long time? All of these things can help when applying for a loan.
If the bank sees that you have been at your job for years and have not changed jobs every year or so they will feel more confident that you are what is called “a good risk”.
Also, if you had a short time when things were rough and your credit score suffered a bit and can offer up a reasonable explanation to the bank about what happened the people at the bank may soften a bit and accept your lower score more readily and give you a decent deal on your interest rate.
Just know that there are ways around a low credit score and you can find a way to buy the house you want and get a decent deal on a bad credit mortgage from the bank.
Bad Credit Home Mortgage – Knowing Ins And Outs
You are really worried the bank will not approve your request for a bad credit home mortgage. Just like most people you have always known you wanted to buy a house so you saved and saved and have a really good down payment. The only problem now is a couple of years ago you got into that accident, were hurt and couldn’t work for 3 months. You got a little behind and your credit score took a hit.
It is understandable that you would be scared or concerned that the bank would have a problem with your credit score. I mean that is what they look at when considering someone for a loan, right? Right, but don’t worry, that is not all.
No, I am not pulling your leg. Listen. There are quite a few things the bank will look at when considering you for a loan, not just your credit score. first of all when they see the little blip on your credit report they will ask you about it. If the explanation you give is reasonable and legitimate they will take that information under advisement and give you the benefit of the doubt during the decision phase of the loan process.
The best thing you did for yourself is save your down payment, believe it or not. Yeah, your credit score is not the best but because you have a really good down payment the bank will look favorably on you and possibly even take the interest they will charge you down a point or two.
If you had not saved that down payment you would have a harder time borrowing the rest of the money you need but even if you do not have a down payment, getting a bad credit home mortgage is not as impossible as it would seem.
You will also do your self a favor if you have been at your same job for at least a year. Several years at the same position is better but the bank will see one year and be encouraged that you tend to hang on to jobs and are not irresponsible when it comes to your financial obligations.
If you need to, your lender can convince the seller to hold a note on a portion of the loan just like it was a second mortgage, say $10,000. You make monthly payments and maybe even agree on a balloon payment at the end of two years. This is not written in stone however because you should have the option to refinance the small loan within that two year period.
If your credit score is less than perfect you will most likely pay a higher interest rate. but, with the the economy in the condition it is in, even a “bad rate” right now is not really so bad at all.
Presenting enough positive attributes to outweigh the hit on your credit should be enough to have the bank say yes to your request for a bad credit home mortgage.
Bad Credit Refinance – Heal Thyself
Even if you have bad credit, refinance on your existing home is still possible. I know it may be hard to comprehend, you thought you were stuck right where you are; because no one wants to help any one who is down. Usually they do all they can to keep you down. Well, things have changed these days because interest rates are so low your lender may be willing to help without causing too much anguish on your part.
The only thing your lender is interested in is you making your monthly mortgage payment in full and on time. If they have to take a little off the interest to accomplish this fact then they will. They do not want your house. They probably have so many at this point they can’t even count them. The last thing they want is one more house.
Ask your lender to help you learn to rebuild your credit rating in order to refinance your house and help you get out from under some bills. If they start seeing you as a person instead of an account number you will benefit. You can save hundreds of dollars a year on your monthly mortgage payment, because the prime interest rate is still so low.
Remember, your lender is not just going to agree to do this right when you ask them to. They will need some information from you to help them make their determination. They will need your income and verification of that income, how much debt you have and all three credit scores before they will even think of saying yes.
As I said the prime rate of interest has fallen recently and this is a positive thing for you if you do need to refinance. You will still probably pay a higher interest rate when you do refinance but take solace in the fact that you will not pay nearly what you would if the interest rate had not gone down at all. If you do not already escrow property taxes or insurance you may be requird to do so with a refinance just like you would be if you were going for a modification of your loan.
If this happens your payment may not change very much at all but you will have the peace of mind in knowing that your property taxes and insurance is taken care of with every monthly payment.
So what happens if your lender says that after careful consideration they still think you are too much of a risk and responds negatively to your application for refinance? The first thing I would do, other than finding ways to make the monthly mortgage payment on time, would be to check with the state to find out how long it will take to foreclose on a house and what to expect.
Then saving money to finance your move has to take precedence over anything else. So keep up with the monthly bills but if your lender is going to foreclose, save the house payment for several months for your new rental. Go over your finances and simplify as much as possible. Get rid of payments you do not need to make and try to reduce the ones you do need to make. Fixing your finances yourself can give you a great sense of relief and accomplishment. Especially if your lender thinks you are too much of a risk, because of your bad credit, refinance with them is out of the question
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