Do You Need a Bad Credit Score Mortgage?

Published by julia | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Mortgage / Finance, Pinellas County Homes, Real Estate

Let’s face it–these are not great days to be looking for a bad credit score mortgage. Lenders have tightened up their lending requirements significantly, and you can expect that they will be looking at your credit report, your tax returns, and everything else about your financial life to the greatest extent possible before they will lend you any money. If you DO manage to get a mortgage with bad credit, expect to pay a much higher interest rate than the going prime rate. However, this does not mean that you shouldn’t try to buy a house if you have poor credit. It can be done. You just have to be aware of a few things.

1. You will probably not qualify for any kind of bad credit mortgage if your credit is too bad. This means that you’ll need a score of at least 600 for most lenders to work with you. A few sub-prime companies can take people with 580 and 530 scores, but those are few and far between, and the interest you’ll pay is almost double the going rate. If you want the house badly enough and can afford it, however, you might look into this option if your credit is very low.

2. You may have to spend some time repairing your credit to qualify for the loan. The good news is that today’s sub-prime lenders want to be able to help you, because their income depends on you getting the loan. In many cases, lenders today are willing to help you repair your credit, and some even have in-house credit repair programs to assist you. Take advantage of those to get your funding faster.

3. You may need a co-signer. Sometimes, this is the only way you’re going to get a bad credit score mortgage. Only, in this case, it isn’t a bad credit mortgage at all, because you are using the good credit of someone who trusts you to get the loan. That person’s name goes on the loan with you, but only you go on the title to the house. It’s a good way to get a loan at a decent interest rate, if you can find a person who is willing to help you in that way.