Posts Tagged bad credit mortgage lender
Ins and Outs of a Bad Credit Mortgage | Part Five: Finding the Best Bad Credit Mortgage Lenders
Posted by Owen in Bad Credit Mortgages on September 4, 2009
Finding the right lender or broker for your bad credit mortgage is of the upmost importance. This person will be your best chance at getting a good deal – and if you find the right person, they can also be your advocate with the bank or lender.
When you shop – ultimately you’re shopping for the best loan, but you also want to find a bad credit mortgage lender that you can work with. This process can take 30-60 days or sometimes longer, so be sure you are working with someone who will follow through, and who you can get along with.
Online Mortgage Lenders for Bad Credit
There are some plusses and negatives in shopping for a bad credit mortgage online. The drawbacks are that it’s much harder to build up a personal relationship with the person on the other side of the internet. If you can, try to make some kind of personal contact via phone. If that isn’t possible, try to build a rapport over email. Ask them if they like their job and how long they’ve been doing this type of work. Ask them to share with you their funniest story relating to finding someone a bad credit mortgage. If you can build a personal relationship, then shopping for a bad credit mortgage lender over the internet can be a great way to go.
The plusses are that you can quickly compare a lot of different loans, apply online and get feedback instantly. You can use their online tools to determine how much you can qualify for and what kind of interest rates you can expect to get. You can also track your application’s progress online and in most cases, the response time is fairly short.
Brick and Mortar Mortgage Lenders for People with Bad Credit
Applying for bad credit mortgages can be a time consuming process, and often there are a few times when you have to meet with your broker. Having someone local that you can work with can be an asset – if you can find someone you enjoy working with. It’s particularly nice to be able to pick up the phone and make a call if you have a question – and to know you are dealing with a real human being instead of an automated system.
Make sure you ask what kinds of loans they handle. Some brokers specialize in subprime loans, while others are FHA and Fannie Mae approved brokers. The more types of loans your broker or lender can offer, the better chance you will have of finding a loan that meets your needs.
Finding a Mortgage Lender for People with Bad Credit
Ask your friends and family members for referrals – who did they go through when they purchased their home? Ask co-workers and other people you see on a semi-regular basis, like at your child’s school or little league. Often your real estate agent will have a long list of people they can refer you to.
You can also do a search online and compare rates and information from various companies. Be sure to find out exactly what kinds of loans they are authorized to present and always read the fine print. If you need an added layer of security, never hesitate to take your paperwork to your attorney to have him review it before you sign anything. Mortgages will cost you hundreds of thousands of dollars – spending a few hundred to make sure you aren’t missing any important details can be well worth it.
In the last article of this series, we will be discussing how to get the most out of mortgages for bad credit.
Ins and Outs of a Bad Credit Mortgage | Part Six: Getting the Most out of Mortgages for Bad Credit
Here is the list of all the articles in this series:
Ins and Outs of a Bad Credit Mortgage | Part One: What are Bad Credit Mortgages?
Ins and Outs of a Bad Credit Mortgage | Part Two: Should I Repair my Credit?
Ins and Outs of a Bad Credit Mortgage | Part One: How Much of a Bad Credit Mortgage Loan can you Qualify For?
Ins and Outs of a Bad Credit Mortgage | Part Four: Types of Mortgages for People with Bad Credit
Ins and Outs of a Bad Credit Mortgage | Part Five: Finding the Best Bad Credit Mortgage Lenders
Ins and Outs of a Bad Credit Mortgage | Part Six: Getting the Most out of Mortgages for Bad Credit
photo credit: woodleywonderworks
Do You Need a Bad Credit Mortgage?
Posted by Owen in Bad Credit Mortgages on August 29, 2009
If you’ve had a few financial bumps in the road it can be easy to assume that your credit is substantially damaged. Until you know the facts about your credit report and score and until you investigate the qualification guidelines of each type of loan, be careful about heading straight for a bad credit mortgage loan. When you decide to shop for a mortgage, be careful not to pre-qualify yourself. You may be able to qualify for better rates and terms than you expect – saving yourself thousands of dollars over the life of your loan.
What is bad credit? If your credit score is above 600, possibly even 580, you may be able to qualify for a conventional mortgage. Before you assume you need to look for a bad credit mortgage or a subprime mortgage, you may want to investigate the various loan options available on the market.
Bad Credit Mortgage Lenders
Remember that there are different types of lenders. There are bad credit mortgage lenders, generally banks, and then there are bad credit mortgage brokers, usually independent firms that shop for the best deals among lenders. Not all lenders or brokers will offer all of the types of mortgages, bad credit or otherwise. It’s in your best interest to look at a few lenders, or a few brokers and try to qualify for more than one category before making your final decision. Ask each company you deal with about the types of loans they are able to offer. Remember they are unlikely to suggest a competing product to you if they do not carry it – even if it is a better program that you may be able to qualify for. It pays to shop around.
Alternatives to Bad Credit Mortgages
Here is a summary of some of the types of loans you may want to consider qualifying for.
Conventional Mortgages through Fannie Mae
Generally the least expensive types of mortgages, Fannie Mae provides good interest rates to those who qualify and have a good down payment.
Details and Qualifications:
- Your debt to income ratio must be no more than 31%.This means that what you pay in monthly debt payments cannot be more than 31% of your income each month.
- 2 years employment history
- Lender must be an approved Fannie Mae / Freddie Mac lender
- As of March, 2009 the highest amount you can borrow is $417,000
- The larger the down payment, the lower the interest rate
- A credit score over 580 is required
- Your property will be appraised once qualification looks likely – the appraiser will need to be certified by Fannie Mae.
- One of the least expensive loan options in terms of interest rates and closing costs.
FHA Mortgage Loans
One of the most popular mortgage types, FHA loans provide flexibility – but require a minimum credit score of 620.
Details and Qualifications:
- Requires an FHA-approved mortgage lender
- Minimum credit score of 620
- Minimum of 2 years employment history
- Stable or increasing income over the past 2 years
- No more than two thirty-day late payments on your credit report in the past two years.
- Bankruptcies must be 2 years old and your credit report must show good credit since then.
- Any foreclosure must be 3 years old or older with good credit since.
- The mortgage payment applying for must be 30% or less of your total monthly income.
- Many different FHA programs available including 100% financing options
Subprime / Bad Credit Mortgages
If your credit score is below 600, you may want to consider shopping for a subprime or bad credit mortgage financing. These programs are becoming more difficult to find, with the changing housing market and mortgage loan regulations – but they are out there.
Details and Qualifications:
- Generally a credit score of 620 or below
- Low down payment programs are available
- Typically higher interest rates
- Higher closing costs
- Employment and income requirements vary
Summary
Check on your credit score before you apply for a loan. Shop the various types of loans, and talk to a few different mortgage brokers or mortgage lenders. If you aren’t able to qualify for a conventional mortgage, shop several subprime mortgage lenders – don’t just settle for the first bad credit mortgage you qualify for. Once you have your mortgage, remember to use your time wisely – work to rebuild your credit within the first few years so you can refinance with better terms.
