Yes, you can get a mortgage loan in most cases for those with bad credit profiles. The good news is that there is a large and ever-growing number of bad credit mortgage loans available. Unfortunately, navigating the brokers and lenders, and understanding the many terms, rates, and fees, can be more of a headache than one would prefer. Finding a mortgage loan for bad credit borrowers is an easier job for a broker who has had considerable experience in working with many lenders and borrowers. Today, utilizing an experienced broker is almost a must.
Securing a Mortgage Loan for Bad Credit Situations–Is It Worth It?
Securing a mortgage loan can be extremely difficult and extremely expensive for a person with bad credit. There are a number of loans, like most 125 loans and short-term low fixed rate loans, that a person with bad credit simply cannot qualify for. People with a bad credit rating will often be denied for standard mortgage loans, as well. If someone with bad credit is approved for a loan, he will most likely have to pay a much higher interest rate than a person with excellent credit. In fact, on average, a person with bad credit pays 30 percent more in interest than the norm on mortgage loans and car loans. Over the course of a 25 or 30-year loan this translates into thousands of dollars of extra money that will be paid.
How to Secure a Mortgage Loan for Bad Credit
A person with bad credit can work with a credit counselor to find lenders that deal specifically in these types of loans. Bad credit lenders can be reached without a go between, but a person stands a better chance of finding affordable rates if he goes through a professional service. A counselor can also suggest methods that might bring a person’s credit score up at least a few points in a short amount of time. If someone’s credit is so bad that no bank or mortgage service will deal with him, his only option might be a subprime lender. Many subprime lenders will offer loans to just about anyone, even if they know there is no chance the loan will be repaid. A subprime loan will have tremendously high interest rates attached to it, and it will require a person to put his home up as collateral, so sometimes, for some people, not getting a loan is actually better than getting a subprime loan. The mortgage loan for bad credit options are diverse, and fully understanding what you are getting into is key.