Buying a house is in reach for those with poor credit histories. Even
with bad credit, you can secure a mortgage with reasonable rates and
terms. Before you assume you have a low credit score, check your credit
report. If you do have adverse credit, plan on getting the best rates
possible by following these three tips.
1. Up Your Down Payment
Besides your credit report, your down payment will greatly affect the
rates you qualify for. In some cases, it’s possible to qualify for
conventional rates with a large enough down payment.
If you have an especially low score due to a recent bankruptcy or
foreclosure in the last year, you may be required to put down 50% of the
home’s value. It is possible to get a mortgage with no cash down, but your
rates will be much higher.
2. Be Flexible With Your Terms
Your loan’s terms can also vary rates within a point or two. Adjustable
rate mortgages will start out about a point less than fixed rate
mortgages. This will also help you qualify for a larger mortgage. But you may
find your rates and payments increase in the future with an ARM.
The shorter your home loan, the lower your rates. You will also save
thousands in interest cost simply by having a shorter loan.
Some lenders have additional discounts for automatic payments. You also
have the option of buying down rates, which can be a real savings if
you keep your loan for several years.
3. Take Time To Compare Lending Offers
Taking the time to compare lending offers is the surest way to save
money on your mortgage. A difference as little as an eighth of a point
will save you thousands on interest. So just like you spend hours
searching for just the right house, so you should spend time researching
lenders.
With online financing companies, you can quickly gather information to
make your mortgage decision. Mortgage broker sites can get you multiple
loan estimates in minutes. You can also get loan quotes through
individual lender sites without hurting your credit score.
View our recommended lenders for
Bad Credit Mortgage loans.
Carrie Reeder owns ABC Loan Guide, an online resource with information about Mortgage Refinancing
Online and Home Equity Line
of Credit lenders.
