If you have bad credit you may be wondering if you can qualify for a mortgage or be able to refinance your existing mortgage. The good news is that a bad credit mortgage loan is possible in many cases. A bad credit mortgage provider specializes in providing loans to individuals and families with poor or less than perfect credit. The bad news is that the interest rate can be quite high and you do have to be careful to watch out for predatory lenders who may be trying to take advantage of those with bad credit.
The major difference between bad credit mortgage loans and conventional mortgages (like a 40-year mortgage) is the credit score you need to qualify for the loan and the interest rate you will pay. For conventional mortgages you usually have to have credit score of 620 or higher. If your credit score is less than that you will probably need to shop for bad credit mortgage loans. Or if you you are looking to refinance your existing mortgage, there is also bad credit mortgage refinancing available.
Although you may end up paying a high interest rate, a loan for people with bad credit may still be advantageous to you. The mortgage can help you to improve your credit and provide you with the opportunity to build up equity in a home rather than just paying rent. With bad credit, you probably won’t be able to get no doc loans (aka no doc mortgage), but if you build your credit up, you may be eligible.
Even though mortgage loans for bad credit do exist, you still will need to qualify for one when you have bad credit. Lenders will be looking at your income along with your recent credit history. You generally need to have at least two years of documented income, preferably in the same line of work. You will also be much better off if you can show that you have taken steps to improve your credit and that your recent payment history doesn’t show any late payments.
If you don’t qualify at the present time for a mortgage for bad credit, all is not lost. You may just need to work on improving your credit for a year or two. You might want to consider a credit restoration service if you are having a hard time repairing your credit, and you’re tried on your own, but to no avail. Concentrate on making all payments on your bills and debts on time and work to lower the amount of debt you have. This will greatly improve your chances of qualifying for mortgages for bad credit. If you have had a recent bankruptcy and are looking for a bankruptcy mortgage loan, then you may have to have a lot more down and pay a lot more in interest.
When shopping for a bad credit mortgage, be sure to compare quotes from several lenders. Also check your credit report before applying for a mortgage to make sure there aren’t any errors on it. If there are any errors you can dispute them with the credit bureaus. Also be sure to check the background and qualifications of the bad credit lender as there are some unsavory lenders our there who try to take advantage of people with bad credit.