There are two different types of mortgage companies: prime rate mortgage companies which deal with people who have good credit and can easily qualify for a mortgage loan at the current rate; and sub-prime mortgage companies who deal with everyone else at a slightly higher interest rate in order to protect their investment. This second group of people, the ones with bad or no credit, can still buy a home. They can purchase it by securing a bad credit mortgage loan. Let's take a look at some of the important features of bad credit mortgage loans.
Terms And Conditions
Don't accept the first offer you get. You may have bad credit, but you are looking for a chance to rebuild your credit and have something you can call our own. Shop around for your bad credit mortgage loan and look for the lowest interest rate you can possibly get. Believe it or not, the amount of competition out there has actually helped lower the interest rates for people with bad credit almost to the point that they are even with prime rates. Negotiate the rate a bit if you find a lender that is reputable and trustworthy, but a little higher than other offers. They may be willing to meet your terms.
When you are shopping for that bad credit mortgage loan, don't forget to include in your questions things like closing costs, origination costs, surveys, and other testing that is usually required in order to buy a home. These costs can be pretty hefty on their own and you will need to know whether or not your loan will cover it. If the lender you are speaking to does not answer your questions, is pushing to get your to accept their offer, and simply tries to rush you should be told, 'Thanks, but no thanks.'
Consider hiring or seeking the help of a mortgage broker to find a bad credit mortgage loan that is right for you. They have contacts in the business and know who the reputable companies are. They can also haggle the loan for you and you will get to come out on top with a bad credit mortgage loan that's just as good as a conventional one - maybe even better!
Money Down, Rates Down
The more money you have for a down payment, the better interest rate you will get on your bad credit mortgage loan. 20% is usually the minimum that will be expected although if you pay more, no one will complain. Try and save up this money before you even go house shopping. Here's what you may need based on your credit score:
- Less than 490: 30% or higher down payment
- 490 - 520: 20% down payment
- 540 or higher: 10% down payment
According to mymortgagetips.net, there are some lenders who will finance you 100%. Some of them are legitimate and some are too good to be true. Compare your interest rates, closing costs, and other terms to what a prime rate mortgage loan would cost to see if the company is trying to pull the wool over your eyes with a sweet and tempting deal.
For more information on mortgage loans, check out sdlcgs.com. You can find out everything you need to know about all types of loans so that you can make an educated decision.