Bad Credit Home Mortgage

With all the news about the lack of available credit lately, you may wonder whether it’s possible to qualify for a bad credit home mortgage. Though it may be more difficult for people with bad credit to obtain a home loan in the current credit climate, it can be done. There are a few things you can do to ensure that you get the best possible rate on a home mortgage, even if you have bad credit.

If you already own a home and would like to refinance, 20% equity is the magic number that will allow you to refinance. Likewise, if you are trying to obtain a bad credit home mortgage for the purchase of a new home, you are far more likely to get a better rate if you put at least 20% of the purchase price down on your new home. If you can’t afford a 20% down payment, you may still be able to buy, but realize that your interest rate will be higher. It used to be that new home buyers could obtain 100% financing in the form of an 80/20 arrangement, but this is sadly no longer the case.

Quick Credit Fixes

If you have borderline bad credit, you might be able to take some steps to avoid a high interest rate bad credit home mortgage. Try requesting removal of recent inquiries from your credit report, or pay down your credit card balances to less than 50% of the total. Even a few months of on-time payments could significantly increase your score. Remember too that even though you may think you have very bad credit, you won’t know what kind of loan you qualify for until you apply. Credit is not the only factor that determines your ability to obtain a home loan.

Use an Online Mortgage Calculator

Use an online calculator to help you determine how much house you can afford. You can also benefit from completing an online quote form so that lenders can compete for your business. Don’t make the mistake of settling for a sub-prime loan if lenders are willing to loan you money on more favorable terms. There is wide variability in the amount of risk a lender is willing to assume, and a “bad credit” home mortgage can range from a slightly higher than average rate to predatory lending.

Don’t be lured into predatory lending schemes just because you have less than perfect credit. Make sure you do your research to find the best bad credit home mortgage rate available.