If you have good credit, you have more options for home loans. Many mortgage lenders are willing to give home loans to people with low credit scores because they know that bad credit can happen to anyone. Increasing your credit score is, of course, the best way to increase your chances of getting a low rate. Even if you have bad credit, it is still possible to get a loan. Here are some things to think about when applying for a mortgage with bad credit.
Expect your mortgage rate to go up.
Even though a lot of lenders...
If you have good credit, you have more options for home loans. Many mortgage lenders are willing to give home loans to people with low credit scores because they know that bad credit can happen to anyone. Increasing your credit score is, of course, the best way to increase your chances of getting a low rate. Even if you have bad credit, it is still possible to get a loan. Here are some things to think about when applying for a mortgage with bad credit.
Expect your mortgage rate to go up.
Even though many lenders offer homebuyers with low credit scores rates that are similar to current averages, these rates are a bit higher than the averages. People with bad credit can find homes they can afford because mortgage rates are low.
If you just got out of bankruptcy or foreclosure, your home loan rate may be a few percentage points higher than the average. So, you might want to wait to buy a home until your credit gets better. On the other hand, buying a home right after a bankruptcy or foreclosure may be a good idea if you want to improve your credit score quickly and can afford a large mortgage payment.
Take Advantage of Sub Prime Mortgage Lenders
Most of the time, people with good credit can get loans from traditional mortgage lenders. These people are thought to be good candidates. Don't worry if you don't belong to this group. There are many lenders who offer home loans to people with bad credit.
How to increase your chances of being accepted
If your credit score is very low, it may be a while before you see a big change in it. Still, you should work on your credit as soon as possible. Getting a better rate may be possible if you raise your credit score by a few points.
It's easy to keep good credit. But you have to be smart about how you use credit. This means paying your debts on time and lowering the total amount you owe. If you have too much debt, you might want to talk to a non-profit debt consolidation service. Also, credit counselling can give useful tips on how to handle credit better.
