Poor Credit Mortgage
Regardless of your credit score it is possible to find a lender out there who will give you a home loan. Unless your credit history is so flawed as to make you an unqualified risk there is a lender with cash to lend. The problem however is that their requirements may be too hard for most people to live with.
The added price tag that comes with a low credit score when applying for a home loan is high interest rates, high down payments and high fees/points. Poor credit mortgages can carry interest rates in the 10 percent to 15 percent range with a down payment of anywhere from 20 percent to 50 percent of the purchase price and upfront originating fees of as much as 10 points (1 point =1% of the loan).
High fee structures are part and parcel of the bad credit mortgage industry. It is so much harder to find lenders willing to lend to people with bad credit so brokers justify the high fees charged by the work required to fund the loan.
It is obvious that it is far more desirable to have a high credit score when looking for a mortgage however most people just decide that they want a home, call a Realtor and jump right into the deep end without any thought into the process of credit repair.
If your credit history is challenged and you still want to own a home but need to take out a home loan to meet your home ownership goal it might be advisable as a first step to get your credit report and study it to see if there any things you can do to raise your credit score into the good to high range.
Simply paying off or paying down credit card balances can have a large positive affect on your credit score. High credit card balances in ratio to the credit card limit are seen as risk to the lenders and result in lowering your credit worthiness which in turn lowers your credit score. Try to keep your carry over balance at no more than 30% of your limit. If you have more than one card try to spread the balances over all the cards.
Check through your credit file for outstanding payments or judgments are dragging your credit score down. Many people feel that they have moved on from the old cell phone bill or utility bill that the neglected to pay for what ever reason and have now totally forgotten. The trouble is that your credit file holds its memories for 7 years and bankruptcy memories for 10 years.
If there are outstanding amounts on your credit report that you can afford to pay off call your creditor and negotiate to pay the outstanding balance in return for them adjusting their entry on your credit report to paid off satisfactorily or some other positive appearing entry.
Most unpaid bills are sold by the original lender after a period of time to a debt collector or collections agency. A word of warning here which it might be wise to heed, collection agencies are not lenders, mostly they do not report to credit reporting bureaus, they merely collect debt that they have bought at a discount. If you are negotiating with a debt collect service remember that their single and only goal is to get your money, they may promise you the world to achieve this goal, but if they did not put the entry on your credit report they will not be removing it no matter what they say.
If you are paying off an old debt to have it removed form your credit file to improve your credit score you will need an assurance in writing from the party who notified the credit bureau in the first place that they will remove it after payment. You have the money, they want it, you are negotiating to have a negative entry removed from your credit report. Do not; repeat do not hand over your money until you have something concrete other than the word of a collection agent that the negative information will be removed.
Regardless of what you choose to believe you do not need to be an expert to raise your credit score. The effects of raising your credit score into the good range will save you a lot of money in upfront fees and considerable money over the life of the mortgage in interest payments.
If you are interested in applying for a bad credit mortgage or in how to locate and apply formortgages for poor credit we have a wealth of free information at Mortgages for Poor Credit.
