What Do You Need to Get Approved for a Bad Credit Mortgage?
Most people believe that they cannot get a bad credit mortgage. The fact of the matter is that many lenders are open to helping people with low credit scores or people who can prove they are improving them. The largest institutions out there are likely to be the most scrupulous, but many small and private lenders are willing to provide a bad credit mortgage. Call us today to discuss your options.
How Low is Too Low?
Technically speaking, there is no credit score that will disqualify you from getting a mortgage. However, it is up to the lender to choose the risk profile of the people they offer loans to. Credit scores above 670 are considered good to exceptional, while credit scores down to 300 are considered fair and poor.
If your credit score is below 670 and you are looking for a mortgage, there are some things you should be aware of. It can be tougher to find a mortgage with a low credit score, and mortgages will typically carry higher interest rates. That means the amount you pay to borrow the money will be higher the lower your credit score.
How Much Extra Will a Bad Credit Mortgage Cost?
People with poor credit scores can pay around twice the amount or more than someone with an excellent credit score. So, if you have poor credit and take out a mortgage for $250,000, you will pay almost $180,000 in interest, which someone with excellent credit will pay close to $100,000 over 30 years. This is certainly something to consider when thinking about purchasing a home.
Mortgage Application Rejected, What Now?
If you have applied for a mortgage at your local bank with a low credit score, do some shopping around. Search out other banks and other types of lenders. A short conversation should be enough to understand if you can attain financing through them.
Aside from this, you can look for lenders that will take collateral or look for a co-signor. A co-signor accepts legal responsibility if you are unable to follow through with the loan agreement. For most people, this is a big responsibility. If you are unable to find a co-signor, you can save up to make a larger down payment or seek out lending assistance programs.
How Do I Get a Bad Credit Mortgage?
Start shopping around. Look for smaller and private lenders. These types of lenders are more likely to work with your situation. Another good idea is to start working on your credit score by budgeting and paying down debt. So what are you waiting for? Call BMC Mortgage & Investments today!