Buying a Home With Bad Credit - Tips on Finding the Right Broker or LenderWritten by Carrie Reeder
You can buy a home with a bad credit record; you just need to find right mortgage financing package. Before you sign up with first company that offers you a loan, remember to research offers to be assured you are getting a fair deal.
Know Your Credit Rating
Your credit score is one of biggest factors in determining points you will pay for your loan. People with scores between 620 and 800 have near perfect credit and will have lowest rates and fees. Scores between 620 and 550 mean an interest rate or two higher. 600 is usually cutoff point for 100% financing. Scores less than 550 mean mortgage interest rates are up to 5% higher with up to five points. Lenders will also require a down payment between 5% and 20%
You can find your score online along with your credit report. This is a good time to make sure all information is correct on your record. Any discrepancies should be checked out and corrected before applying for a loan.
Know The Fees
Arm yourself with information so you will know what are reasonable fees for your type of loan. Mortgage brokers are paid for their work through points paid up front or through lifetime of loan by lender. Lenders also make money through points.
Sub-Prime Mortgage Loans - Things You Should Know About Sub-Prime MortgagesWritten by Carrie Reeder
Sub-prime mortgages are not that much different from average mortgages. They have interest rates, points, and fees. They can be compared online, and they have seasonal trends. The only real difference is that as a borrower with a less than stellar credit record, you will have to pay a slightly higher rate for lenderís increased risk. What is important is that you prepare yourself with information about sub-prime mortgages and compare lending companies to make sure you get best deal.
Paying For Risk
If you have bad credit or declared bankruptcy, a mortgage lender is taking a big risk that you will pay back loan. People with bad credit are seven times more likely to default on loans, so lenders make up for this loss with higher interest rates and fees. However, some companies take advantage of people with poor credit, so you should compare companies.
You donít have to meet with a lender face to face to negotiate a mortgage loan. You can go online and compare financing packages from multiple bidders by supplying some personal information. Rates and fees are different between lending companies, so it pays to shop.
The Mortgage Season