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Getting a Bad Credit Mortgage Loan in Today’s Lending Environment

14 May 2012 14 Comments

Guest Post: The lending industry has undergone many changes during the last few years. Lenders are having difficulty meeting their obligations, and many have filed bankruptcy. Some loan programs are being eliminated making it harder for people with poor credit to get good loans.

Factors that Led to the Decline of Bad Credit Mortgage Lenders

  • Increasing interest rates
  • High foreclosure rates
  • Loan buybacks
  • Defaults on commitments

People with bad credit have fewer options for obtaining mortgage loans today. Some loans are requiring larger amounts of cash for down payments making these loans impossible for some people to obtain. Lenders are setting harder guidelines for first time homebuyers since they have been identified as being high risk for mortgage loans. Individuals who apply for bad credit mortgage loans can expect to wait longer for approval. For some individuals, the only choice for a first time homebuyer’s loan is with a hard moneylender.

What to Expect from a Bad Credit Mortgage Loan

  • Individuals who do qualify for a typical bad credit mortgage loan can expect to receive their first mortgage with high interest rates, and if it is the second mortgage, they can expect the interest rates to be even higher.
  • Some of these loans will offer fixed payments for the first couple of years, and then the payment can change to a higher amount.
  • These bad credit loans will usually have a prepayment penalty attached preventing an individual from getting out of the loan without a large price.

Even though some lenders are offering bad loans to individuals with bad credit, some lenders offer loans with better terms. These good loans allow individuals better opportunities to acquire money to become a homeowner.

Good Loan Options

  • Some lenders do not base the loan on an individual’s credit score, and these lenders are more willing to lend almost all the money necessary for the home.
  • Alternative ways are used to cover the closing costs and other expenses for obtaining the loan instead of the buyer having to come up with large down payments.
  • Someone can assist in helping the borrower become qualified by becoming a co-borrower on the loan.
  • Grants are available to help with down payments.
  • Some good lenders welcome first time home buyers.
  • Loans are available with no penalty for prepayment. This allows individuals to be able to refinance once their credit rating is improved. They can refinance with lower interest rates for a better loan option.

Miscellaneous Things to Consider When Choosing a Bad Credit Mortgage Loan
Some lenders offer two options for interest rates. One is the fixed rate, which remains the same percent throughout the loan. The other one is the variable rate, which is flexible. When the market rate changes, it will cause the interest rate on the loan to change as well.

Some mortgage loans will allow individuals up to thirty years to pay back the money. However, it is better if an individual can pay the loan back sooner. A property that is not completely paid for will be harder to sell if someone chooses to put the property on the market. In addition, if an individual fails to meet the payment obligations, the loan will be in default and the bank can take possession of the property.

Before financing a property, an individual will need to do some research to find the best lender. By researching loan terms, an individual can find better choices for bad credit mortgage loans. The lenders will need to be investigated to ensure that they are reliable.

14 Comments »

  • HtmlSymbol said:

    Most mortgage lenders now require 24 month's seasoning from the bankruptcy discharge date. Fortunately, our program is no credit qualifying so the bankruptcy is not a factor with us.

  • Luke said:

    What program is this you speak of? Any more information to offer on this?

  • Dan said:

    Can you let me know what product you are speaking about? glosol@yahoo.com

    Thanks.

  • Steven said:

    Interested in hearing more. Sjrobinsonvp@yahoo.com

  • tawanda said:

    Please send info to tawandamartin@AOL.com

  • candice michelle said:

    Experts say if you can save 50 basis points (0.5 %) with no closing costs it might be worthwhile. חג שבועות

  • kane hipolito said:

    I agree with that Candice but the question if you are a expert if you are not whats up with that?
    zahal

  • Murali said:

    Iam looking for Mortgage loan but my Cibil points are poor around 500. Can you pls support with some options.

    Urgent

    Murali
    9841994943

  • solimulkori said:

    Professional Credit Solutions has years of experience and huge successes with getting inaccurate items removed from our clients credit reports. We specialize in educating and teaching our clients how to build great credit, how to build a high credit score and how to keep good credit once you have it.

  • Donna said:

    I had a foreclosure in July 2011, but my credit scores are all over 680 and I only have 10% down. Is there a mortgage lender out there for me? If so, can you provide the lender information.

  • Jim Anderson said:

    great article

  • jimmy said:

    In these days you must be very careful before when you getting a credit because you might end up bankrupt. That is why I always consult Bankruptcy Attorney San Antonio.

  • FL Divorce said:

    No obstant això, gairebé totes les empreses estan dirigides per una o dues persones i són pressupostos molt limitats. No es pot arribar al consultor de màrqueting. Les seves necessitats són més urgents i els recursos en general és limitat.
    FL Divorce

  • Prop Makers said:

    Credit check is very needed to do for many companies. The assurance should be valid enough to accept.
    Prop Makers