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Bad Credit Mortgages

Obtaining Financing for Bad Credit Mortgages

Think your credit score isn’t going to matter when applying for bad credit mortgages? If so, then think again. Your credit score plays a key role in your financial future. A lot of people don’t realize how their credit scores are affected when applying for and using credit cards or when taking out loans. Life doesn’t always go as planned and something unexpected and as seemingly insignificant as a child’s sickness, an accident, or temporary unemployment can wreak havoc on your credit score. If you don’t understand anything else about bad credit mortgages, understand this: bad credit mortgage lenders will ask about your credit score.

Meet with different lenders

Gone are the days of easy approval of bad credit mortgages. If your financial situation is such that you’ve fallen on hard times, the best you can hope for is a lender that understands your situation and tries to help get your mortgage approved. Some lenders will negotiate with people applying for bad credit mortgages but others will not waver from their established lending criteria. You will not know which type you’re dealing with until you meet with several lenders to discuss your financial situation. Chances are, you’ll find a bad credit mortgages lender that’s willing to approve your loan application, but it’s likely going to carry a higher interest rate and include other costs to help offset the risk.

Accept the unavoidable

Bad credit mortgages carry higher rates of interest. This is unavoidable so know this before you even apply. What you should also know before you apply is that even high mortgage interest rates can be lowered. They won’t go as low as those offered to people with excellent credit scores. But depending on what you can put up as collateral, your income, your current credit score and the mortgage amount you’re applying for, you may be able to obtain a more favorable interest rate on your bad credit mortgage. Something else that may be unavoidable is the amortization schedule. While applicants with good credit likely will be offered longer terms, those with bad credit may be given terms of just six years.

Bad credit Loan types

As mentioned previously, unsecured loans (loans without collateral) will undoubtedly have higher interest rates than secured loans. But something else to consider is the down payment amount. When applying for bad credit mortgages, the lower your credit score, the higher your down payment requirement. Expect a requirement of a 30% down payment if your credit score is below 580. Normally, the better your credit score, the lower the down payment requirement. But it is always a good idea to put as much towards the down payment as possible, even on bad credit mortgages. A higher down payment may translate into a lower interest rate.

Bad credit mortgage brokers

A broker’s job is to match mortgage applicants with lenders that are likely to approve the mortgage. A good broker has a wide network of lenders which enables it to obtain instant quotes. More lenders mean the better your chances of loan approval. Plus, when the broker does most of the work, you save both time and money.

Online quotes

You can also search for bad credit mortgages and obtain quotes online. If you have an internet connection and a computer, you can obtain quotes and apply for bad credit mortgages without even leaving home. How’s that for convenience!