While a credit score is not actually a reflection of your worth as an individual, it can feel that way at times, particularly when you're ready to move your family into a home of your own and face obstacles because of your credit. The Current Mortgage and Credit Crises The current economy is not a good time to be seeking a bad credit mortgage. With the real estate market imploding and creditors cracking down on people with less than stellar repayment records, this is a very difficult time to seek a mortgage with bad credit. But if you realize going in that you may have difficulty getting a mortgage with your credit rating, and you're willing to be persistent, seek out a good mortgage broker who can help you find a legitimate lender, and pay a little more in interest to get into a home now, it is possible.
Can You Get a Mortgage with Bad Credit? There are mortgage lenders who specialize in borrowers with bad credit. Even in the current economic downturn, it is possible to get a mortgage with bad credit. Lenders may be more selective about their borrowers now, but if your income is adequate and you've shown a willingness to save and try to repair your credit, you can probably find a lender who will help you get into a home.
The problem is, you may also find a "lender" who wants to profit from your bad situation. Unfortunately, unscrupulous people are always willing to take your money, so you need to be on the lookout for these scam artists and avoid them at all costs. How to Spot Fake Bad Credit Lenders Fake lenders are most easily spotted by the fact that they want you to pay up front for their services. They may couch this as an "evaluation" fee, or a fee for finding you a mortgage. However they phrase it, this is a way of separating you from your money without performing any services. If you pay this fee, you will never hear from the "lender" again, and your money will be gone. You may be asked by a legitimate lender to pay a very small fee (on the order of $20-$25) to have them pull a credit report. This is to cover their costs of pulling the report, and does not make them a fake lender. In fact, a fee this small would hardly interest fake lenders. The scam artists ask for far larger fees, often in the hundreds of dollars, and "guarantee" you will get a loan, or you will get the money back. Their guarantee is worthless, of course, because as soon as you turn over the money, they disappear with it, and you'll never hear from them again. Two warning signs of a fake lender are an upfront fee to find you a loan, and a "guarantee" that you will receive a loan. No one can guarantee that, and no real lender will, but a scam artist has no problem making such a guarantee, because he knows you'll never be able to collect on it.
What Will a Genuine Lender Do? A genuine lender will not give you any numbers regarding what you can qualify or how much you will be able to borrow, until the loan officer has examined your credit report in detail. The fact is, bad credit mortgages vary widely, based on what your credit and income look like and what the current circumstances are in the credit market. A legitimate lender will be extremely courteous and helpful during the process of looking over your credit report and financial situation and helping you determine what kind of loan, if any, you may qualify for. Real lenders answer questions and help potential borrowers with any issues or problems they might have. Keep in mind that the customer service you receive before the loan is granted tells you how you will be treated later. You will never get better service than while the lender is trying to get your business, so don't accept anything less than the best. What You Should Not Accept Scammers will try to convince you that since you have bad credit, you will not be able to find anything better than what they are offering, and that the service you're receiving is the best you can expect "because of your credit." This is not true. While you may not be able to get the greeneasylife.com best loan terms, you deserve, and can find, a lender who will treat you with respect and courtesy and try to get you into the greeneasylife.com best loan available considering your circumstances.
Getting Help Getting a Loan In many areas, housing agencies and community advocacy organizations offer help in getting a loan with less than desirable credit. These programs often offer a class you can take, usually for free or for a token amount, and a certificate of completion you can take to certain lenders to show that you are trying to improve your situation, get your credit back in line, and buy a home. These programs will usually line you up with a lender open to bad credit mortgages and sometimes real estate agents who are experienced in helping first-time homebuyers find the right property. Do not feel embarrassed or ashamed about signing up for one of these programs. If you have had financial difficulties in the past and are now overcoming them, you should feel proud that you are emerging from your problematic past and are about to become a homeowner.
This is an important step and you should not feel bad about needing a little help to get back on track. Hidden Terms and Conditions of Bad Credit Mortgages You should look carefully at any loan you are offered, to make sure there are not hidden costs that drive up your payment or your overall cost for the home. One common hidden cost is a prepayment penalty. When this exists, you may be paying excess interest simply to cover the prepayment penalty. If a lender insists on this penalty and you cannot find a loan without it, ask the lender to reduce the amortization, to reduce your overall cost. The One Thing to Keep in Mind when Researching Bad Credit Mortgages When you begin looking for bad credit mortgage lenders, do a lot of research, and make sure the lender you decide to work with is legitimate. You can find a lot of information online about any institution you consider working with, and you can also learn a lot by asking real estate agents about lenders they have worked with. Keep in mind that any lender, no matter how sincere they may seem, who asks for a substantial fee to "find you a loan," is trying to scam you. Legitimate lenders do not ask for large fees for their services. They get paid when they make a loan and you repay it. Only scam artists will take your money up front for services they have not, and will not, perform. Keep in mind, when looking for a mortgage with bad credit, that people have, and continue to, get bad credit mortgages. There are lenders who offer mortgages to people in your situation. If anyone else can get a mortgage with less than great credit, you can get a mortgage, as well. You may encounter scam artists in your search for a mortgage. Do not let this worry or deter you. You will be able to avoid these cons and find a legitimate lender who will be happy to work with you to find a mortgage.
If you are interested in going through a program for first-time home buyers with bad credit, contact your local or state housing agency, or talk with a real estate agent in your area to find out if any organizations in your area offer such a program. These programs are usually offered on weekends to help working individuals attend the class, and can provide a great deal of assistance in getting into a home. Making bad credit decisions in the past has happened to almost everyone at some time or other. Some did not reach the level of having bad credit, and some have recovered. But you are not alone in the position of seeking a mortgage with credit that does not reach the standards usually required for a mortgage. You will no doubt pay a higher interest rate, and may be able to borrow less than you had hoped, but in the long run, you will find that your decision to seek a mortgage and become a homeowner have been the best decisions you've ever made.
Author Jason Brooks is a Denver mortgage originator denverhomelender.com denverhomelender.com Information about Denver mortgages can be found on denverhomelender.com denverhomelender.com
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