Hard To Find Mortgage With Bad Credit
If you want to know how to get a mortgage with bad credit then you are probably one of the millions of Americans suffering from a poor credit score. Having a bad credit score can limit many things in your life but today more and more people are having trouble paying their bills and therefore companies have began relaxing their policies when it comes to mortgages with bad credit. In fact, a whole new sub section of mortgage lenders have cropped up that cater to those that don't have perfect credit, called subprime lenders and offering mortgages at rates higher than the national averages.
If you want one of these mortgages for people with bad credit then you might want to think about a few things. First of all, what kind of mortgage are you looking for? If you are a risk taker you might think about an adjustable rate mortgage (ARM) also sometimes called a variable rate mortgage. If you want to lock in a rate that you are being offered now for the remainder of your loan, then you might want to go with a fixed rate mortgage, which holds the interest rate the same throughout the entire term of the loan and can save you a lot of money if mortgage rates increase over time.
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The next thing that you'll want to think about when considering mortgage loans for people with bad credit is what sort of term that you'll want to go with. This is a tricky one when it comes to bad credit because sometimes you will get financed faster by choosing a longer term, so that your monthly payment is affordable, and sometimes you'll be able to get a quicker approval by choosing a short term mortgage, such as ten or fifteen years. It depends upon your income and if you are able to make those larger payments for the short term mortgages.
What will be the deciding factor on mortgage loans with bad credit in most cases will be your down payment. A large down payment can make a huge difference to a finance company when deciding whether or not to approve you for a loan. Not only that, but making a down payment of twenty percent of more eliminates the need to pay for mortgage insurance, which is paid by the buyer, in the event that the seller isn't able to collect the mortgage payments and must foreclose on the property. This can be an extra hundred dollars or so per month so it's important to get rid of it as quickly as possible.
If you decide to go with a subprime mortgage lender then make sure that you shop around. Unlike prime mortgage rates, subprime rates can vary considerably from one lender to the next. Try to get several quotes before you decide on a subprime lender. Also, be very cautious when signing a contract with a lender and read it carefully or have an attorney go over the document for you. You want to make sure that there are no ridiculous terms in the contract that are going to bite you later on and the best way to determine this is by having a professional, such as an attorney, read through it.
Posted in Home Improvement Post Date 02/05/2016