Mortgage Loans for People with Poor Credit
If you’re looking to buy a new home or refinance your current mortgage, arm yourself with information. The message is everywhere, but if you don’t already, know your credit score. There are plenty of lenders willing to loan money, but understand that if your credit is poor or blemished, mortgages are a bit harder to come by.
Plenty of folks have come to me with the expectation that they will need a mortgage loan for bad credit when in reality, they don’t. Here’s what you need to know about mortgage loans for people with poor credit.
A poor credit score is less than 620. Any higher and you probably wouldn’t need to be concerned about getting a poor-credit loan. But if you’ve been late with current mortgage payments in recent years, regardless of your score, you might need to pursue a loan designed for someone with poor credit.
So where would you find such a loan?
Go to a bank or speak with another financial professional. Or visit an online lender which often will offer a free consulation. It’s best to be knowledgeable about your situation before you start; know your credit score, going interest rates and the probability that you will qualify.
In speaking candidly with a professional, you can gauge whether you can afford the monthly payments for the loan. It can be a shocker; some folks don’t consider the interest fees when trying to calculate their monthly payments. And when considering interest, remember that high-risk loans, or loans given to people with poor credit, characteristically have a much higher interest rate than a prime-rate loan.
Most people with poor credit don’t bother to try and look for a mortgage.
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You might even have doubted your own ability to get a loan. You might not be eligible, but you will never know if you don’t ask. Three factors will undoubtedly determine whether you will qualify for a loan. Your credit history is the first factor. Consideration is also given to the value of the home you wish to buy and the amount you need to borrow. And finally, a lender will consider the overall likelihood that you can repay the loan based on your income. In a nutshell, it’s not impossible to get a mortgage if your credit isn’t perfect. Don’t be afraid to discuss your options with a bank representative or online lender; you’ll never know what you can achieve if you don’t ask.