How To Get Mortgages For Bad Credit
In today's financial climate when applying for mortgages bad credit will hurt you in several ways. Either through a direct denial, a much higher interest rate, or terms that are difficult and uncomfortable. However, if you want to know how to get mortgages for bad credit, there are a few tricks and tips that I can give you. These will generally only be secondary factors however, because your credit history is very important to a mortgage lender. However, if you get all of the secondary factors on your side you may be able to get your mortgage even with a poor credit score.
Lenders do look at your credit score when you are applying for bad credit mortgages, but they also look at a few other things. They look at how stable you are, such as the amount of time that you have lived in your current house or apartment and how long you have had your job. Also, another factor that can make a huge difference when applying for mortgage loans with bad credit is how much you are willing to put down. If you are putting down a significant portion of the home's cost then it is much less likely that you will default on the loan, since you already have so much invested.
Another thing that lenders look at is your currents assets and available income, or your debt to income ratio. If you have money available then lenders will know that you will be able to pay for the mortgage. This doesn't necessarily mean that you will pay, but your current payment habits are much more important than past credit problems. For instance, loans or credit cards that you didn't pay on when you we're eighteen or nineteen will be much less significant than the current credit card that you have been paying on for the past two years when it comes to applying for mortgage loans for bad credit.
If you have had past credit problems and you haven't been able to get any current credit then you may be able to prove that you pay your bills on time in a much less traditional way. For instance, if you have been living in your apartment for five years and you have always paid your rent, power bill, gas bill and telephone bill on time, it is likely that none of these will be on your credit report. However, if you can get a letter or show paperwork that proves that you have been paying these on time for the past few years this will count for more than a credit card that you defaulted on when you we're in your early twenties.
If you decide to go with a lender that accepts people with bad credit then be very cautious. There is a reason that these lenders cater to those with low credit scores. Their terms may be ridiculous or their interest rate may be so high that you'll pay four times the value of your new home in interest. There are lenders that will lend to those with bad credit that are not unscrupulous, but they are closing shop in today's economy, as are less honest lenders that advertise loaning money to people with bad credit. The good news is, that having a blemish on your credit report has become quite common, especially in these difficult financial times and it doesn't mean as much as it did a few years ago.
Posted in Real Estate Post Date 02/20/2016