Bad Credit Mortgage Loans

By: Zack Fair

If you have bad credit, you may be second-guessing yourself as to whether or not you can afford a new home. You may be in the mind-set that only financially stable people can afford a new home, but that is where you would be wrong. Many people with bad credit are able to obtain a mortgage. This can be a very overwhelming task if you have bad credit, but it has also never been easier for this type of borrower. There are many lenders out there now who are more than willing to help people with bad credit achieve their dream of owning their own home. The only difference is that you will need more of a deposit as the maximum loan is 90% of the purchase price.

Bad credit mortgage loans are available to borrowers looking to purchase their first home, or those who are looking to refinance a home that they already own. In order to obtain a loan of this sort, the first thing you should do is to do your homework. Check around and see what lenders are willing to give bad credit mortgage loans, and also ask around for testimonials. Word-of-mouth advertising is extremely telling in this sort of case as it tells you which companies are out to really help you, versus those that are just out there to get money off people in your shoes.

However, it is extremely important that you don't apply to dozens of lenders that offer bad credit mortgages. By doing so, you may think that you are covering all your bases and will be able to get several quotes to compare. In all actuality you are hurting your credit score by applying to multiple lenders, as well as making the lenders you are applying to think that no one wants to deal with you. Your best action would be is get quotes but only apply with one unless the one you applied to is really slow or can't get the loan then apply to the next.

After making a list of who you want to consider, ask them about your options, but be careful that they don't consider your inquiries as a "mini application." If they consider it a "mini application", they will perform a credit check on you, and it goes on your credit report that you were checking into a loan, when in all actuality you weren't applying for one. Having this on your credit report could harm you because having too many loan applications on your credit report can drastically lower your credit score.

Once you have evaluated which lender would be your best choice for a mortgage loan, sit down with them and discuss in detail what it entails, so that you aren't confused. As well as filling out an application. By doing your research, you should only be filling out a couple applications for a loan.

Even with bad credit, you can still get a mortgage to purchase a home, or refinance a home you already own. The interest rates might be higher than you would have on a traditional mortgage loan, but by showing that you can make payments on time to your lender, your credit score will be better for it.

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