A Mortgage And Bad Credit Just Don't MixOr Do They
Mortgage and bad credit used to be two mutually exclusive things for a home buyer, but in today's market as more and more people get into debt and have lower and lower credit scores it is easier than ever to get a bad credit mortgage. There are some things you should know before you begin the process of applying for the loan, and there are certain other factors that affect whether or not you are approved for the mortgage as well as your credit score. We'll go over what you need to know about mortgages and bad credit here.
In the past, when it came to mortgage loans bad credit would stop you in your tracks. But today, there are specialized lenders called subprime mortgage lenders that work with people that have had past credit problems. These type of lenders charge higher interest rates because they are taking a major risk on home buyers with bad credit and the amount of money that they make over time has to make up for the people that will inevitably default on the mortgage loan and make it difficult and costly for the subprime mortgage lenders.
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The interest rates vary when it comes to bad credit mortgages. Some lenders charge very high interest rates and will work with just about anyone, and some lenders will only work with certain buyers with credit scores within limits that they set, or that meet other requirements that they have for a bad credit mortgage. There are a few ways that you can improve your chances of getting this type of mortgage. The first thing that you need to do however, before you begin applying for the subprime mortgage loan is to check your credit.
Knowing your credit score can help you determine whether or not you will need to do a lot to qualify or very little. One of the things that you can do is to determine whether or not your credit history has recent negative information or not. If the information is old, and you can build your credit history with some other type of credit such as a secured credit card, then you might be able to build a recent history of good credit and your negative information won't hurt as much as it would if it was recent. If you have recent history then you may be able to negotiate with creditors to get rid of it by paying it.
If you have a large down payment you may be able to get by with a regular mortgage at prime interest rates rather than a subprime mortgage which will cost you a great deal of money over time. Most people put down around five percent but if you can save money and have a down payment between ten and twenty percent than the lender may not consider you a risk at all even if you have bad credit on your credit history. Another thing that will help you not appear to be a risk is income. If you make over $50,000 a year that will help the lender know that you can afford the mortgage which will help you as well.
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Posted in Cleaning Services Post Date 04/16/2016