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If you are looking for a home, but have doubts you will be able to get a mortgage, take heart, you just need to find the right mortgage for you. You may be wondering about your credit score, so just so you know, anything less than 670 is considered “bad,” or “poor” from 300-579

No two bad credit situations are the same. Lenders always look at more than just your credit score, they also look at how much you have for income, size of your downpayment, any debts you have in collections, and how much debt you have. There are options out there for those with less than perfect credit scores.

Let’s look at a Bad Credit Mortgage, and see if it may be the right fit for you.

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What is a Bad Credit Mortgage Loan?

A Bad Credit Mortgage loan is a loan created to allow those with poor or bad credit to buy a home. There need to be some form of collateral to secure the loan.

You may find a mortgage with bad credit, but you will usually have a high interest rate and higher mortgage payments. It helps to have a large deposit. If you have cash, put it towards your downpayment. A credit score will only qualify you for a set amount of loan, you can cover what the difference is in cast and still get the home you want.

Tips to help you Get a Mortgage When You have Bad Credit

These tips will help you improve your financial score and help you get a better mortgage.

  1. Improve your Credit.

    If you get a mortgage while you have bad credit, you can still work on your credit by refinancing your mortgage to get better terms. How can you improve your credit?

  • Keep your oldest credit accounts. This shows a longer credit score history. If you cancel the oldest account, it will be deleted from your history and gives you less credit history to on on.
  • Don’t take on any new debt. Forget about applying for new credit cards, this just shows you are trying to get money in a hurry, and causes even more debt.
  • Know your credit limit and stay under it. Showing credit agencies and mortgage lenders you are responsible with your money by not using more than 30% of you available credit card limit.
  • Pay bills and other financial responsibilities on time. Don’t miss payments on any of your bills. Go on a payment plan if you can’t pay the bills in full. Avoid not paying bills at all.
  1. Get yourself a Bad Credit Mortgage Broker.

    Sometimes called a “B” lender or a “Sublime” lender, this type of lender specializes in people with bad credit, or have gone through bankruptcy. You can also find a private mortgage lender to help you. Though there may be more fees involved, you will be able to get a mortgage.

  2. Save a large downpayment.

    Lenders take in your income, debt, and size of down payment when considering your mortgage loan. Since the minimum down payment is usually 5%,of the purchase price, try to save up more than that, it will then be less of a risk for you. A larger down payment (20 to 25%) shows you are financially stable to go a house in the eyes of a lender, and it lowers monthly payments.

  3. Find a co-signer.

    Although a little risky, getting a co-signer for your mortgage can help you out a lot, especially if the co-signer has great credit. The co-signer guarantees the mortgage payments will be made, if you can them then the co-signer is legally required to take over making payments. You will get better mortgage rates with a co-signer, since they are considered a co-borrower and his or her income is considered during the application.

  4. Renewal options will be available.

    At the end of your mortgage term, you will be able to renegotiate terms. During your current term, you can work on your financial situation.

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Three Benefits of Getting a Bad Credit Mortgage

  • Consolidate or catch up on your debt.

    By getting a bad Credit Loan, you will be able to deal with debts and high payments each month by consolidating them all into one payment. Your debt will then be all together in one lower payment.

  • More available funds.

    Getting this type of loan will help you with having more of a cash flow. The loan lowers your payment so you have more money for the everyday things you need.

  • Plan for the future.

    A Bad Credit Mortgage will allow your credit score to rise after you start making payments. The more time goes on, and the more payments you make, the better your score will become. You will be able to get better terms later on, saving thousands of dollars in interest.

Contact AKAL Mortgages, your expert mortgage broker, today. Ask if a Bad Credit Mortgage would be the right choice for your situation and home owning dreams. When we say YES! We stand behind our promise

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