At present, bad credit mortgage loans are more widely available than every before. Still, you will need to be more careful and do more work, if you want to secure the best possible deal. Use this advice to get a loan that is beneficial and affordable. Research bad credit mortgage loans before you get to look for a home to buy. In this way, you will be able to decide how much you can afford to spend on a house. You will be able to limit your set of options and find a property that meets your needs and requirements and that you can afford to buy.
Repair you credit score before you get to apply for home financing. According to experts, you need to have a score of at least 580, even though a score over 660 will definitely allow you to secure financing. If you have a score between 500 and 580, you may need to restrict your options to FHA financing only. The best way to repair your credit score is to make bill and credit card payments on time. Try to use up less than a third of credit card limits. Additionally, experts recommend not applying for any kind of credit at least a year before applying for bad credit mortgage loans. Try to save as much as you possibly can during this year.
This type of mortgage loan has many benefits -- I personally used one of these several years ago. I had poor credit - I was able to obtain a mortgage loan with the interest rate at about 3-4% higher than the average. I paid this loan every month on time - which helped my credit rating... 3 years later - my credit score was higher and I was able to refinance to a mortgage with a much lower interest rate. This was a win-win situation -- I benefited obviously because I was able to purchase a home and repair my credit and the lender benefited with the higher interest rate they received.
Larger Down Payments. Again - the lender looks at the "risk" they are taking by granting these types of loans. Because of that risk they usually want a larger than average down payment. While gathering that larger down payment might not always be easy -- the up side of this is - the larger your down payment - the lower your monthly payments will be.
Finally, be prepared to make a down payment of over 3.5% of the value of your property. Expect the percentage to reach 10% for most bad credit mortgage loans. Keep in mind that the larger down payment you make the more affordable your loan will be.
Repair you credit score before you get to apply for home financing. According to experts, you need to have a score of at least 580, even though a score over 660 will definitely allow you to secure financing. If you have a score between 500 and 580, you may need to restrict your options to FHA financing only. The best way to repair your credit score is to make bill and credit card payments on time. Try to use up less than a third of credit card limits. Additionally, experts recommend not applying for any kind of credit at least a year before applying for bad credit mortgage loans. Try to save as much as you possibly can during this year.
This type of mortgage loan has many benefits -- I personally used one of these several years ago. I had poor credit - I was able to obtain a mortgage loan with the interest rate at about 3-4% higher than the average. I paid this loan every month on time - which helped my credit rating... 3 years later - my credit score was higher and I was able to refinance to a mortgage with a much lower interest rate. This was a win-win situation -- I benefited obviously because I was able to purchase a home and repair my credit and the lender benefited with the higher interest rate they received.
Larger Down Payments. Again - the lender looks at the "risk" they are taking by granting these types of loans. Because of that risk they usually want a larger than average down payment. While gathering that larger down payment might not always be easy -- the up side of this is - the larger your down payment - the lower your monthly payments will be.
Finally, be prepared to make a down payment of over 3.5% of the value of your property. Expect the percentage to reach 10% for most bad credit mortgage loans. Keep in mind that the larger down payment you make the more affordable your loan will be.
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