Bad Credit Mortgages

Have you had your car repossessed? Do you have a list of unpaid loans? Was your credit card confiscated when you tried to move to a different country to avoid inevitable bills?

If you answered yes to any of the above questions and you are desperately trying to finance a new home you will probably be a good candidate for a bad credit mortgage.

Bad credit mortgages are an option for borrowers who have problems becoming approved for a standard mortgage because this type of mortgage usually doesn’t conform to standard lender guidelines that most banks and financial institutions adhere to.

Lenders that offer bad credit mortgages accept borrowers with unsavory credit histories and they often overlook things that would immediately turn off other lenders like low credit scores, excessive debt or bankruptcy.

Bad credit mortgages differ from other conventional mortgages in many ways.

Characteristics of Bad Credit Mortgages:

  • Traditional documentation normally required to qualify for a loan is not necessary
  • You can be approved with excessive debt
  • Rates can be higher than conventional mortgages to compensate for risk to lenders
  • Flexible guidelines are in place
  • Late payments are freely accepted
  • Even with a bankruptcy or foreclosure in your credit history you will likely be approved

Even though bad credit mortgages exist it is important that, if you can help it, you avoid being a candidate because they ultimately end up costing more which is a sure fire way to remain in debt for the rest of your life.

Ways to Avoid Needing a Bad Credit Mortgage:

  • Try to sustain a steady well-paying job for a few years before applying for your mortgage
  • Find a reliable cosigner with a good credit history who can make payments if you cannot
  • Pay your bills on time
  • Pay off all of your outstanding loans

The more your credit rating improves the more likely you are to be approved for a conventional mortgage so try to get a handle on your spending habits and save as much money up as you can. The more money you have saved, the more you will be able to put into a down payment on your mortgage which can directly influence the type of mortgage you are approved for and the interest that you end up paying in the long run.

Bad credit is no good, but if you have it and can’t get rid of it the bad credit mortgage can help you towards homeownership and if you can pay it off it may even provide you with an opportunity to improve your credit history.