At present, bad credit mortgage loans are more widely available than every before. Still, you will need to be more careful and do more work, if you want to secure the best possible deal. Use this advice to get a loan that is beneficial and affordable. Research bad credit mortgage loans before you get to look for a home to buy. In this way, you will be able to decide how much you can afford to spend on a house. You will be able to limit your set of options and find a property that meets your needs and requirements and that you can afford to buy.
Repair you credit score before you get to apply for home financing. According to experts, you need to have a score of at least 580, even though a score over 660 will definitely allow you to secure financing. If you have a score between 500 and 580, you may need to restrict your options to FHA financing only. The best way to repair your credit score is to make bill and credit card payments on time. Try to use up less than a third of credit card limits. Additionally, experts recommend not applying for any kind of credit at least a year before applying for bad credit mortgage loans. Try to save as much as you possibly can during this year.
This type of mortgage loan has many benefits -- I personally used one of these several years ago. I had poor credit - I was able to obtain a mortgage loan with the interest rate at about 3-4% higher than the average. I paid this loan every month on time - which helped my credit rating... 3 years later - my credit score was higher and I was able to refinance to a mortgage with a much lower interest rate. This was a win-win situation -- I benefited obviously because I was able to purchase a home and repair my credit and the lender benefited with the higher interest rate they received.
Get financing that you can afford. According to experts, you should not pay more for financing than around 31% of your monthly income. In fact, it is better for the size of the installments to be lower than $28% of your income. The lower it is the better. If you happen to have some financial difficulties now, you should not rely on better times coming ahead. Try to be as prudent as possible and always prepare for the worst case scenario.
Other Things. Points - While points are not usually charged on most mortgages today - they are indeed usually part of these types of mortgages. Pre-Payment Penalty -- Lenders that are willing to give these alternative mortgage loans want to ensure they get compensated. Usually these loans carry a 1 or 2 year pre-payment penalty.
Repair you credit score before you get to apply for home financing. According to experts, you need to have a score of at least 580, even though a score over 660 will definitely allow you to secure financing. If you have a score between 500 and 580, you may need to restrict your options to FHA financing only. The best way to repair your credit score is to make bill and credit card payments on time. Try to use up less than a third of credit card limits. Additionally, experts recommend not applying for any kind of credit at least a year before applying for bad credit mortgage loans. Try to save as much as you possibly can during this year.
This type of mortgage loan has many benefits -- I personally used one of these several years ago. I had poor credit - I was able to obtain a mortgage loan with the interest rate at about 3-4% higher than the average. I paid this loan every month on time - which helped my credit rating... 3 years later - my credit score was higher and I was able to refinance to a mortgage with a much lower interest rate. This was a win-win situation -- I benefited obviously because I was able to purchase a home and repair my credit and the lender benefited with the higher interest rate they received.
Get financing that you can afford. According to experts, you should not pay more for financing than around 31% of your monthly income. In fact, it is better for the size of the installments to be lower than $28% of your income. The lower it is the better. If you happen to have some financial difficulties now, you should not rely on better times coming ahead. Try to be as prudent as possible and always prepare for the worst case scenario.
Other Things. Points - While points are not usually charged on most mortgages today - they are indeed usually part of these types of mortgages. Pre-Payment Penalty -- Lenders that are willing to give these alternative mortgage loans want to ensure they get compensated. Usually these loans carry a 1 or 2 year pre-payment penalty.