Bad Credit Mortgage Loan Options ...
If you currently have what is called a “bad credit history” or a low FICO credit score, there are several bad credit mortgage loan options available to you. You should be prepared to pay a higher interest mortgage rate, though.
Many mortgage lenders have loosened their credit requirements. The Federal Housing Administration (FHA) has even provided mortgage loans to people with less than perfect credit.
One of Fannie Mae's Mortgage Programs called “Expanded Approval / Timely Payments Rewards” is a great option for people who wish to secure a mortgage loan with a bad credit history or credit problems. With the “Timely Payments Rewards” mortgage loan, the initial mortgage loan interest rate is high. If the borrower pays their mortgage on time for specified period, their mortgage loan rate would drop 1%. This program also streamlines the approval process and helps borrowers with small amounts available for a down payment.
Some mortgage lenders are offering mortgage loans for up to 105 – 107% of the purchase price of the home. This allows the borrower to purchase his/her home with nothing down and have the processing fees paid as well. Of these mortgage lenders, some will consider an applicant with a FICO credit score of 580 (nothing below 600 to 620 is considered an optimum credit score). Usually, how this works is the mortgage lender finances the property with a first home loan of 75 to 80% of the value, and a second home loan of 25 to 30% of the value. The borrower would then have two loans on the property.
There are mortgage lenders who specialize in bad credit mortgage loans. They have the experience in working with individuals who wish to secure a mortgage loan and offer several options. To find these mortgage lenders, simply search on a major search engine with the keywords “bad credit mortgage lender.”
As a word of warning, be extremely careful when trying to secure a bad credit mortgage loan option. Learn everything you can about different mortgage lending terms, normal processing fees, normal interest rates, etc.
Unfortunately, there are mortgage lenders who prey on people with bad credit who are also searching for mortgage lending. They offer what seem to be easy terms and do not explain everything in full, knowing that some people are desperate to secure a bad credit mortgage loan. Many people sign the loan documents without fully understanding what terms the agreement requires. This could end up costing the person a huge amount of money.
