Financing a mortgage with bad credit borrower is a way to lenders help people with credit problems purchase a new home. Below are few useful real world tips that will assist those with seeking approval from a bad credit mortgage lender.
Be cautious, yet realistic. Borrowers with poor credit should be aware that there's always a few bad apples out there and this instance you need to wary of predatory bad credit mortgage lenders. A predatory lender is a lender who takes advantage of the unfavorable position of the borrower by charging unwarranted higher than called for interest rates and charging excessive closing costs.
Most states have lending laws that say a lender can only charge an interest rate a certain percentage above the retail or normal market interest rate for borrowers with bad credit. Normally this rate is 5% - 8% higher but even that in many instances is extreme.
Another issue with predatory lenders is that they charge very high monthly payments, knowing that the borrower will not be able to pay them and thus, force the owners go into foreclosure. Still, there are other lenders that appear to be financing mortgages but in reality, they are robbing the borrowers of their cash and home titles. Predatory lenders usually target those home owners who have already received a foreclosure notice.
That being said, predatory lenders are rare and if you do a little homework, use common sense, read all the terms and conditions and shop around you should easily be able to avoid these types of lenders.
Tip - Through the Internet, you can easily research the current mortgage market and acquaint yourself with the present mortgage market conditions. Browse the financial and mortgage websites and compare the interest rates on bad credit mortgage loan.
In addition, the borrower should get a copy of their credit report. Mistakes by the primary credit reporting agencies do happen and so it's always a good idea to get a copy of your credit. Request a copy of a tri-merged credit report from every lender you apply for a loan from. The reason you want a tri-merged credit report is because all loan decisions are based on the middle credit score and so if you only get a credit report from a single credit reporting agency it won't accurately reflect you credit score.
Tip - Although interest rates are higher for borrowers with bad credit many are willing to accept the higher rate because it's a way to get into a house or refinance and pay off higher interest rate credit cards. They also know that if they pay their mortgage on time for 24 months they will improve their credit score and be able to refinance at a lower interest rate.
The borrower should also focus on their cash assets and income. Factors like the borrowers debt to income level are always considered by lenders when deciding to whether or not to approve a borrower for a mortgage.
Tip - For options in finding the best lender for you, check out the links below.
Visit second mortgage bad credit or refinance mortgage with bad credit or bad debt credit card for more information on loan and mortgage options. |
ไม่มีความคิดเห็น:
แสดงความคิดเห็น