Bad credit lender loan mortgage is a type of home loan available to people with less-than-perfect credit. Lenders modified lending practices when the banking crisis occurred last year. In order to obtain a mortgage loan today, borrowers need to possess a high FICO score, verification of employment, and sufficient down payment.
Bad credit lender loan mortgage is not the same as subprime lending. Instead these lenders help people with poor credit or low income obtain a mortgage loan. They can also help borrowers refinance their current mortgage.
With the ongoing credit crisis, few mortgage lenders are approving new or refinance loans for borrowers with bad credit. Many people want to buy a house, but are unable to because they can’t obtain financing through traditional lenders.
Bad credit loan companies require borrowers to provide sufficient evidence they can repay the mortgage note. They typically charge higher interest rates and closing costs than banks. On a positive note, interest rates are currently the lowest they have been in decades. Paying higher interest rates on a bad credit note can still provide a reasonable monthly payment.
Individuals facing foreclosure might be able to obtain financial relief through bad credit lenders. If you are able to find a lender willing to refinance your mortgage loan, you could stop foreclosure and perhaps reduce monthly payments.
Be aware there are many unscrupulous people preying on desperate homeowners. If anyone approaches you to directly buy your house, or asks you to sign over the deed in exchange for taking over payments, obtain legal counsel. There are legitimate companies who can help with all stages of foreclosure. Just use caution and conduct research to ensure you are working with a reputable, trustworthy company.
Regardless of your reason for needing a bad credit lender, always engage in due diligence and find out everything you can on the company. If you plan to buy a house, plan to spend nearly as much time researching lenders as you do house-hunting. Otherwise, you could end up becoming the victim of a scam artist.
Spend time shopping around for mortgage lenders. Compare interest rates, closing costs, and pre-payment penalties. The goal is to get out from under the bad credit loan as quickly as possible. Make certain to pay your payments on time. Pay early or include extra money whenever possible. This will help improve your credit score.
Once you rebuild your credit and can prove credit-worthiness, refinance your mortgage with a lender who offers lower interest rates.
If your credit is extremely poor, you may not qualify for a loan through bad credit lenders. Experts suggest renting affordable housing for 12 to 24 months. Use this time to repair your credit and establish a down payment savings account.
Other options include engaging in seller carry back mortgages. With this type of financing the seller provides financing for 2 to 5 years. Afterwards, the buyer obtains a traditional mortgage loan.
Some sellers offer lease-to-own homes. Typically, a portion of the rent money is applied toward the purchase of the home. Tenants rent the property for 2 to 3 years, with the option to buy at the end of the lease. Rent-to-own contracts can be drafted to suit the needs of all parties involved.
While bad credit lenders can help you buy or refinance your home, they can lead you to financial disaster. Check out all financing options prior to making a final decision.