Mortgages for People with Bad Credit — It’s Possible!
There was a collective scream as the housing market fell in 2008-2009. A significant portion of the American population (indeed the world), completely lost their shirts as a result. Credit scores fell too as people were unable to make their mortgage repayments. Without a doubt, the financial landscape is no longer the same as it was. Mortgages for people with bad credit have changed significantly.
The big question that’s on everyone’s lips is how to buy a home when your credit is bad. First, you still can buy a home if your credit is bad. Second, it’s no longer easy. In fact, it’s very difficult. It used to be that mortgage lenders were practically throwing mortgages at people who were woefully under qualified. We’re talking about people working minimum wage jobs, who have no credit, and who’ve never ever owned a single car getting a mortgage. The complete lack of financial regulation resulted in mortgage brokers engaging in predatory practices. And the result was the housing crash of 2008 and 2009.
In our present day (2010), if you want to easily qualify for a home mortgage, you are going to have to show several things now:
- Good Credit
- Firm record of steady employment
- Deposit on Home
Unfortunately, most people don’t qualify with these three things. That makes it very tough indeed to quality for a home mortgage for the rest of us with bad credit. Mortgages for people with bad credit are no longer exactly easy to get.
But they can still be had. You’ll find the people willing to lend to you when your credit is bad significantly reduced. You can pretty much kiss any chance of securing a mortgage loan for a bank with bad credit – not unless you can explain away your bad credit and you have a very large deposit to throw down on the home. But, hope is not lost. There may be some online websites that specialize in bad credit – but you are going to have to meet some stringent quality assurance demands still.
Your best bet for getting a mortgage with bad credit is to actually repair your credit history. A tried and true tactic is spending a year or two repairing your less than stellar credit history while saving for a down payment. After a year or two, you may be in pretty good shape – both financially and credit history-wise – to start searching for a mortgage – and not a subprime mortgage but a regular one.
Before you can repair your credit history, you need to find out your credit score. Two ways to do this: the easy way and the long way. The easy way is to use one of the free credit check websites to obtain your credit score. The other option is to request your credit report be mailed to you. There are 3 credit agencies and each will have a credit file on you. You will need to request it from all three. You are entitled to one free report every year. Once you have your credit history at hand, you can start to fix it.
If you still don’t have very good credit, then you may want to consider looking for an online mortgage lender who does specialize in giving out a bad credit mortgage. It will be much easier to qualify for a mortgage loan from one of these firms than your local bank. But there are a few negatives to consider too.
- Very high interest on subprime mortgages
- Loan terms not friendly to the borrower
- A Lot of Research
If you can live with the costs, then it’s worth pursuing a bad credit mortgage.