Understanding Bad Credit Mortgage Terms and Options
By Karen LawsonMortgage Credit Problems Columnist
Buying a home can
provide financial benefits such as home equity and potential tax incentives,
but how do you buy a home with bad credit? Mortgage lenders have developed many
types of bad credit mortgage loans for people with poor credit. When shopping
for a home loan, it's important to understand how mortgage loan features can
impact your mortgage payments, your mortgage balance, and the potential for
accumulating home equity.
Low or No
Documentation Loans
Standard mortgage financing typically requires documentation
of two years' income, including tax returns, pay stubs and bank records. For
people who can't supply this information, mortgage lenders offer low and no
documentation mortgage loans. It's important to understand that bad credit
loans may come with additional fees or higher interest rates due to additional
credit risks. Mortgage lenders do provide statements disclosing financing
costs, and it's always a good idea to do some comparison shopping. Ask mortgage
lenders for an estimate of costs associated with any bad credit mortgage you're
considering. If there are fees and charges you don't understand, feel free to
ask. Mortgage lenders want to match their mortgage loans to each customer's
financial situation.
Your Bad Credit:
Honesty is the Only Policy
Don't be embarrassed about having bad credit. Life brings
changes, and mortgage lenders understand this. They can provide meaningful
assistance only to the extent that you are willing to supply an honest account
of what caused the problems and your current financial situation. In order to
qualify for a bad credit mortgage, potential lenders will want to verify your
current income and expenses. If you have a bankruptcy in your past you may
still qualify for a mortgage. Lenders can also supply referrals to credit
counseling agencies and first-time homebuyer programs.
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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