Bad Credit Mortgage Expert

Bad Credit Mortgage Loans

Interest rates hit record lows in late 2009. Financial analysts predict that they’ll remain low for many months to come. But this isn’t good news for you. You have bad credit, due to several financial mistakes you’ve made, and you don’t even know if you can qualify for any mortgage loan, let alone with low interest rates. Don’t fret. You are certainly very far from alone in this one. And here’s the good news: It is possible to find a bad credit mortgage. You just have to be willing to search for the right mortgage lender.

Of course, there is some bad news, too. Even though you’ll be able to qualify for a mortgage loan with bad credit, you’ll undoubtedly have to pay higher fees and interest rates, too. It’s just what happens when you take out bad credit mortgages.

Three national credit bureaus – TransUnion, Experian and Equifax – maintain credit reports on you. These reports detail the way you’ve handled your finances. If you’ve missed credit card payments, your credit report will track it. If you’ve run up large amounts of revolving debt, your credit report will make note of it. The information from these reports is then used to determine your credit score, a single number – usually ranging from 600 to 780 or so – that encapsulates your creditworthiness.

Mortgage lenders rely on your credit score when determining whether to give you a mortgage loan. They also use the score to determine the interest rate they’ll charge you on the money they lend. The interest rate can make a huge difference in your monthly payment; a high interest rate can mean that you’ll pay hundreds of dollars more a month to borrow money.

If your credit score is 620 or lower, you’ll generally have to apply for what is known as a bad credit home mortgage. This means that you will pay higher mortgage interest rates, sometimes much higher, than what borrowers with higher credit scores are paying.

In other words, you need to balance things over and make a decision. How important is it for you to purchase a home at this instant? Can you wait a year, two years or longer to buy a home? If you can wait, it makes more financial sense to put off buying a home until your credit improves and you can avoid a bad credit mortgage loan.

Improving your credit score will take time, that’s a fact. You’ll have to generate a new financial history that includes paying your bills on time, slashing your revolving debt and closing all those extra credit card accounts you still have open. Unfortunately, this whole process takes time. You can not boost your credit score overnight, no matter what certain unethical companies may promise.

It’s best to avoid a bad credit mortgage unless you absolutely need a mortgage loan right now. By waiting until your credit improves, you’ll pay far less each month for that mortgage money.