Mortgage Loans with Bad Credit Do’s and Don’ts

Mortgage Loans With Bad Credit

Getting mortgages for people with bad credit is getting harder than before due to more stringent requirements for credit score and history due to recent credit crunch. Having bad credit will cost you money once you decide to buy a new home by paying more down payment and potentially higher mortgage rates and that is in the event if you qualify. Working on improving your credit history ahead of time before you apply for mortgage loans with bad credit will do wonders on cutting on your interest rates and overall costs of buying a home.

Preparation is the key on getting mortgage loans with bad credit and involves a lot of organizing and planning on your part with your financial situation. The first step in arranging for mortgages for people with bad credit is getting your current credit score and devising a plan on improving it with the help of a professional credit counselor.

Planning for a mortgage loans with bad credit starts with closely keeping track of all your current bills, paying them on all time and avoiding excessive credit limits that can drive your credit ratings down. Do not move credit around, try paying it off and do not open too many new credit accounts in hopes of restoring your credit score. If you are struggling to pay certain bills, contact your creditors to devise a manageable payment plan for you that will help you pay it off over a period of time. By increasing your credit score even by mere 20 points, you can shave off half of a percent of mortgage loans with bad credit.

Renting a home while you improve your credit ratings is the best solution in your case allowing you to save thousands of dollars in the long run. If you are on the market for a high priced home costing over $400,000 avoiding jumbo mortgage rates is important by taking out two mortgages that will allow you to stay under jumbo mortgage rate caps and paying too much money in interest.

If you are a freelancer person with unsteady income, getting a self employed mortgage might be tricky in the light of a recent credit crunch due to difficulties in showing your steady income and proving that you could be trusted to the mortgage lenders. However, getting a self employed mortgage is not entirely impossible and will just take more efforts on your part in documenting all steady streams of income, attaching letters and references from large clients and saving up for a large down payment.

Read our other articles to find out why it is important to lend form agencies that possess this important seal of surety.