Everyone wants to be able to buy a house one day, and it can be cheaper than renting in many cases. So why shouldn't someone with bad credit be able to get the loan they need to buy a house? The truth is that there are more than a few lenders who would be willing to give you the bad credit mortgage you want, under certain conditions. Here are some details about it.
Bad credit will keep you from getting some of the best deals, but it won't keep you from getting anything. The first thing you need to do to make sure you can get the best deal is to look at your credit report and make sure there aren't any problems that aren't there. These things are easy to happen and probably happen a lot more often than most people think. After you fix any mistakes, you can move on with the process.
The next step is to decide if you need the bad credit mortgage quickly or if you want to take a little time to fix your credit score. Of course, you should do what you can to improve your credit score. This will help you get a better deal.
Choose the type of loan you need. When you start your application, you will need to know which one you want. There are basically two types: ones with fixed rates and ones with rates that change over time. The interest rate and payment amount on a fixed-rate mortgage don't change over the life of the loan. The interest rate and payment amount on an adjustable-rate mortgage, on the other hand, change every period, which could be monthly or yearly.
Go to the mortgage officer at your bank or look online to start figuring out how much you can borrow. When a lender makes you an offer, don't get so excited that you forget to compare it to other offers. The truth is that many people will lend you money, but many of the terms will not be what you want. Look carefully at all of the terms, compare the interest rates, and then look at each fee on its own. Watch out for terms that are longer than 30 years. It does lower your payments, but it also makes sure that the total amount you owe goes up.
You should be able to put down at least 20% of the cost of the house to get better deals. Also, you'll want to use it in a way that means you won't need a bad credit mortgage again. Your credit can be fixed, but don't take out a home loan that is bigger than you can handle. A financial counsellor can help you figure out the best way to handle your money and can tell you how much of a mortgage you should take on. Don't forget that your home is now the security for your mortgage, so you'll need to be careful to keep your new credit score.
