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Bad Credit Mortgage Loans: Shopping for the Best Deal
By Karen LawsonMortgage Credit Problems Columnist
Bad credit typically
means paying more for consumer credit and for mortgage loans. Lenders issue
credit based on perceived risk, and the more risk is involved (such as lending
to borrowers with a bad credit) the higher finance charges are likely to be.
The good news is that it's possible to shop for bad credit mortgage loans
before looking for a new home. Shopping
for a mortgage loan, especially a bad credit mortgage helps make sure that you
get the best mortgage loans, terms, and financing charges available to you.
Talking with mortgage lenders before shopping for a home can help borrowers
with bad credit learn about available mortgage options and their cost without
the pressure having an offer on the table.
Your Bad Credit is
Not the Next Guy's Bad Credit
Credit problems happen for many reasons, but lenders are
typically more interested in credit scores than in the reasons for your bad
credit. It's still a good idea to
document reasons for bad credit however. For example, on an FHA loan
application credit problems caused by a one-time situation such as illness or
unemployment may be viewed differently than a long-term record of habitually
bad credit.
Serious Credit
Problems: Looking Up
Borrowers with serious credit problems can get bad credit
mortgage loans under certain circumstances, but for many loans a minimum of two
years must pass after the completion of a bankruptcy or foreclosure. It's
possible to get a bad credit mortgage loan in less time, but the finance
charges including interest rate, points, and lender charges are likely to be
higher. Comparing the cost of getting a bad credit mortgage immediately, or
waiting the necessary amount of time to qualify for a conforming mortgage loan
can be useful in determining when to shop for a bad credit mortgage loan.
About the Author
Karen Lawson is a
freelance writer with extensive experience in mortgage banking. She holds BA
and MA degrees in English from the
About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage banking. She holds an MA degree in English from the University of Nevada, Reno.
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