Bad Credit Mortgage
Is it possible to get a loan even with a bad credit mortgage? In today’s
mortgage and loan trends, a bad credit mortgage is absolutely possible.
In the past, applying for a loan involves a thorough check up on your
credit history and income background. If your history is less than
perfect or if your income is not that high or both, then your application
for a loan is instantly rejected. This practice limits the number
of people who can apply for a loan.
Today’s market has adopted more flexible methods. Bad credit mortgages
makes it possible for people with low credit scores to still apply
for a loan and get approved. When applying for a bad credit mortgage
loan, no pre-qualification process is involved. Lenders who offer
bad credit mortgages among their list of loan programs give their
customers a chance to redeem themselves. With a bad credit mortgage,
your credit history is nothing more than history and you still get
your money’s worth.
There are several lenders who offer bad credit mortgages. When you
choose one, make sure that you’ve learned everything that you need
to know about bad credit mortgages. More often than not, bad credit
mortgages sound too good to be true. With bad credit mortgages, It’s
best if you keep an eye on the catch.
Bad Credit Mortgages for Higher Interest Rates
Bad credit mortgages are usually characterized by high interest rates.
Lenders charge borrowers higher interest rates for their bad credit
mortgages as compensation for the risk they take. Like it or not,
borrowers who have bad credit records are loan risks and are viewed
as such by lending companies. In exchange for letting these types
of customers get bad credit mortgages, higher interest rates are charged.
This helps protect the lender should something happen and he had to
foreclose on bad credit mortgaged property.
Discount Points in Bad Credit Mortgages
"Money makes a good servant, but a bad master.”
- Francis Bacon
Discount points in bad credit mortgages are common. A discount point
is comprised of a percentage of the total purchase price. Bad credit
mortgage borrowers are charged higher discount points, usually four
to five points. Borrowers with credit may not pay for these points
or they do but only for a very low percentage. With bad credit mortgages
however, points may go as high as ten, although going this high is
not a common practice and against federal law. It all boils down to
insurance for the lending company. Lending companies want to make
sure that they’re getting their money back from their customers’ bad
Larger Down Payments for Bad Credit Mortgages
The amount of down payment required for borrowers on bad credit mortgages
is larger compared to other loan types. In exchange for ignoring the
costumer’s credit history, lenders charge larger down payments from
the total purchase price. Borrowers may not be able to afford the
upfront price of bad credit mortgages. If in any case, you can afford
the down payment required, a bad credit mortgage might even prove
a good thing for you. Since the down payment you made takes a considerable
portion of your purchase price, this means that you pay lower monthly
rates on your bad credit mortgage.
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