Avoid Needing a Bad Credit Mortgage – Fix Your Credit Now
If you have bad credit, you may get stuck with a high risk mortgage with a higher interest rate, prepayment penalties and high closing costs. The best thing to do is to avoid damaging your credit or to repair it as much as you can before you apply for a mortgage. To fix your credit, begin by getting a copy of your credit report and getting your current FICO score. Make sure all the information on your credit report is correct, and if it isn't, get it repaired. Then consider consolidating your credit card debt, student loans and the like and always make your payments on time. In time, your score will improve and the money you save by getting lower interest rates will be worth all your work and sacrifice.
Finding Bad Credit Mortgages Online
Just because you can't qualify for an "A" paper loan, doesn't mean you are without options. There are many decent bad credit mortgage options available if you take the time to look around or if you find a good mortgage broker you can trust. Online lenders usually have a ton of bad credit mortgage programs you can compare and choose from. Don't feel as though you need to only go with one broker though. Different brokers may be able to provide you with various interest rates, loan terms and loans with or without prepayment penalties.
Applying for Bad Credit Mortgage Loans
Bad credit mortgages, although not the best option, will help you rebuild your credit quickly. If you want to apply for a bad credit mortgage, you'll need several pieces of information before you proceed. First, make sure your credit report and score are accurate. If removing old or closed accounts or removing something that is incorrect from your credit report can improve your score, even slightly, it is worth the effort. Next, you'll need data on your income including pay stubs, deposit slips and the like. Bad credit mortgage loans will often hinge on your proof of steady income. Finally, you'll have strict repayment guidelines. Make sure you can make the payments on time and in full. Don't get in over your head and make your bad credit situation even worse.
Need a Mortgage with Bad Credit? Not the End of the World
A few bad credit mortgage tips to make sure you get the best deal possible:
- Shop Around - Don't be embarrassed by your bad credit, embrace the challenge of taking steps to improve it - and a mortgage can absolutely be one of those steps. Talk to different mortgage brokers and look online at your bad credit mortgage options.
- Make sure your credit score is correct. Remove paid off or closed accounts - make sure you aren't a victim of identity theft or mis-reporting. It can take some time and effort to fix your credit report, but it'll be worth the work.
- Once you have a bad credit mortgage, use it to your advantage. Making mortgage payments on time is the fastest road to improving your credit score.
Need Cash to Pay Off Old Bills? Take a Bad Credit Second Mortgage
When you bought your home, your credit rating may have been in better shape than it is now - but maybe now your only way out of the debt hole you are in is by pulling out some home equity. Don't refinance your primary mortgage - preserve that good rate - consider taking out a bad credit second mortgage. A bad credit second mortgage, when taken out for debt consolidation or payoff, can be a great option to help you out. The fees will be relatively low - and many loan companies require proof of payoff so you won't be able to spend that money on anything but what you really need it for.
Advantages to a Bad Credit Mortgage
A bad credit mortgage may leave you with a bad feeling in your stomach, but in reality, despite the higher interest rate, this is really a smart next step towards reaching your financial goals. When you consider the benefits of home ownership and credit repair, the short term obstacles of a bad credit mortgage are well worth the risks. You won't be throwing money away on rent, on time mortgage payments are the fastest way towards credit repair, and you'll truly be on your way to improving your financial situation through smarter investment of your money. Take advantage of bad credit mortgages to move forward. The short term pains are worth the long term gains.
Choosing Between Bad Credit Mortgages
When considering your options for bad credit mortgages, look out for the following three pitfalls that can sneak up on you:
- Fees and Penalties – Sub prime loans can not only cost more to process, they can also incorporate higher late fees and payment penalties of which you should be aware.
- Prepayment – Some bad credit mortgage companies need you to stick with their program to ensure they make their allotted profit - and this can mean prepayment penalties (a fine for paying off the mortgage too quickly). This can mean a huge loss if you refinance too soon, so watch out for length and amount of prepayment penalties.
- Rewards – Some mortgage companies and banks will reward you for improved money management. For instance, if you make a number of payments on time, your interest rate may be reduced. These kinds of incentive rewards are great for folks determined to turn over a new and better credit leaf.
Finding the Lowest Rates on Bad Credit Mortgage Loans
Shopping around is the key to protecting yourself from a bad credit mortgage mistake. It can't be said enough, shop and compare bad credit mortgage programs. Even if you love your mortgage broker, make sure he or she explains the nuances of the programs they have available so you and your broker can make the best decision for you. Also, don't be afraid to shop online. Online mortgage brokers today carry lower overhead and more programs than ever before. Try one out and you'll find that your options are greatly increased - and you'll probably end up with a better program.
Refinancing a Mortgage with Bad Credit
Ironically, someone who secured a great rate in 1985 can get an even better rate today with worse credit. The incredibly low interest rates today make even sub-prime loans affordable. If you think you can get a better interest rate, even with bad credit, look into bad credit mortgage options or bad credit second mortgage options. If you aren't sure about proceeding, just hop online and use a mortgage calculator to figure out how much you might save or learn for yourself that there is no real benefit.
Refinancing Your Bad Credit Mortgage
If you've been religious about making your mortgage payments on time and you've paid down your credit card debt and raised your FICO score, it may be time to refinance that bad credit mortgage you secured a few years ago. You are probably safely beyond your prepayment penalty and you are probably sick of paying such a high monthly payment. You'll be able to get more money for a lower interest rate and you'll be gratified to see all that hard work repairing your credit paying off. Enjoy the benefits of repairing your credit by refinancing your mortgage with a reputable online lender.