If you find the right lender, you can get a mortgage loan for a home even if you have bad credit. With a little time spent online looking for low credit score lenders, you can use loan estimate numbers to decide whether or not to get a loan. Even if you have bad credit, you can find home loans with flexible terms that fit your budget.
The Role of Lenders with Low Credit Scores
Low credit score lenders, also known as "subprime" lenders, give loans to people with credit scores of less than 650 at rates that are a little bit higher than those for regular loans. Rates are usually 1% to 3% higher than loans with a "A" rating, but you can expect to pay more if you just got out of bankruptcy or foreclosure.
Subprime loans don't have as many rules as regular loans, so you have a lot more choices when it comes to the terms. You can get 100% financing, loans that only pay the interest, or a traditional 30 year mortgage with a fixed rate.
Unfortunately, there are companies that will take advantage of your financial situation by charging you high rates and fees. You can avoid these dishonest companies if you look at loan offers from more than one company.
How to Get a Good Estimate for a Loan
The best way to find a lender is to use their loan estimates to help you decide. Online lenders can give you quotes on mortgages in just a few minutes, and they don't even need to look at your credit report. You will not only find out about rates, but also about closing costs and other fees.
Ask for quotes on the loan amount and down payment you want to get the most accurate numbers. Just remember that you will need to get new loan quotes if you decide to change the terms of the loan.
When to get your mortgage loan
Start looking for a subprime lender before you look for a house. This will give you enough time to find the best one. If you set up your mortgage early, you'll have a better idea of how much you can borrow. You will also be able to move into your new home faster.
Most online lenders can approve your loan request in a few days, and you can get the money in two weeks. Your escrow company will be in charge of giving out the last of the money.
