Mortgages For Poor Credit
Contrary to popular belief it is possible to become a homeowner if your credit is poor or even bad. Depend on your credit score it may be necessary to make a sizeable down payment but mortgages for poor credit are available.
However in most cases people with poor or bad credit also don’t have the finances to make a sizeable down payment. A home loan application using mortgages for poor credit ad the financing option in a scenario where the home buyer is not a position to make a large down payment are very dependent on the actual credit score of the applicants for the mortgages for poor credit.
With a credit score of 580-619 though low it is very possible to get a home loan by means of mortgages for poor credit application. Mortgage brokers love this kind on credit as it allows them to make some extra money.
Mortgages for Poor Credit-Credit Score
The problem for the borrower in the 580-619 credit score range is fees. Any mortgage using say a 580 score will come with extra upfront points and most probably a higher interest rate than a person with good to excellent credit would get. This is going to hurt the borrowers pocket book but the chance of an extra point which could be anywhere from $2K to $10K will ensure that you find a broker to work with you.
Remember that if you don’t get a mortgage then the broker doesn’t get paid so you can rest assured that the broker will be working his/her tail off on your behalf to ensure that your mortgages for poor credit application is approved.
Another thing to consider is, is it really in your best interest to take out a home loan when your credit is poor. Keeping in mind that mortgages for poor credit come with hefty upfront fees in the form of points and are back ended with high interest rates that will be significantly raise your monthly mortgage payments.
It might be a better strategy to rent a nice home and save up the difference between the monthly rental and what you would be paying out for a mortgage for poor credit. This could be a sizable amount and within a few years you could have the down payment necessary to buy a home with a large down payment.
You could also use this year or two rental period to improve your credit score. Chances are that you could improve your credit score just by paying down your credit cards.
Mortgages for Poor Credit-Credit Report
It is also recommended that you get a copy of your credit report just to ascertain exactly why your credit score is so bad. There might be charge off there for things like old cell phone bills that you could clear for a few hundred dollars. You won’t know the scope of the issues on your credit report until you look.
I would recommend that before you commit to a mortgage for poor credit that you get a copy of your credit report and see just why your credit is poor.
Mortgages for Poor Credit-Costs
Get a realistic up front estimate of what the typical closing costs are for mortgages for poor credit.
Get a realistic estimate of what your monthly payments including escrow for taxes and insurance are going to be.
Then weigh up the benefits of buying a home with a mortgages for poor credit strategy against renting a similar home.