Many people think that obtaining a home mortgage with bad credit is nearly impossible. That used to be the case many years ago, but not today. These loans are referred to as Subprime Mortgage Loans. Sometimes they are the only way to own a home for those who have frequent late payments, bankruptcies, liens, judgments or other bad reports in their credit history. People with below standard credit will end up with above market interest rates and unfavorable terms, but get a chance to re-establish their credit.
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If your credit history is not so good, there are many companies willing to review your history and loan you money. Usually a credit check and income background is required to obtain a loan and if the results are not perfect, you are instantly rejected. This limits the market for people who can own a home.
Today's mortgage loan market is more flexible, providing you with more options. When applying for a subprime mortgage loan, there is no pre-qualification process. Of course, you're not qualified for the best loan rates and terms, but you get a chance to built new credit history.
Most of the subprime mortgage loans will be too good to be true, so it's important that you keep your eye on the terms of the loan. If you accept the loan and are unable to make the payments on time, you are only adding to your bad history. You'll want to ensure that you can quickly and efficiently live up to the terms and opportunity the lender has provided.
Subprime loans usually have high interest rates because the lenders are charging you for your bad credit history in return for the risk they take by making the loan. Unfortunately, bad credit history borrowers are loan risks and are viewed as such by lenders until they have built up new, current credit history. Consider this one of the reasons to keep your history clean.
Discount points in subprime mortgage loans are common. A discount point is a percentage of the total purchase price. Subprime mortgage loans usually have four to five points higher than prime mortgage loans. Some bad mortgages will go as high as ten points, but is not common and is against federal law. Lending companies want to make sure they get their money back from bad credit mortgage loans.
With bad credit history, some lenders will require a higher down payment on subprime mortgage loans. Borrowers may not be able to afford these higher terms upfront as the price of having bad credit. If you can afford the larger down payment, this will reduce the purchase price of the loan, this translates to lower monthly payments for you.
There are many programs available to people with bad credit history. Bad Credit Loans & Mortgages has a program with no application fees and approval is usually obtained within 24 hours.
E-Loan has many programs for mortgage, credit card and auto loans for those with bad credit history. And the best part is the application time only takes around 4 minutes.
If you need to consolidate your debts or make home improvements with bad credit history, AmeriquestMortgage.com is another company with subprime mortgage loans. They have many options to consider with decent interest rates and the ability to reduce your monthly payments.
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