Every person’s dream is to have a house they could call their own. But, most of the time, when they see the state of their credit score, they give up and realise it would be easier to build an igloo and move into it.
The Possibility of a Bad Credit Mortgage
Good news, though! If you have a bad credit score, that doesn’t mean you have to give up your hopes of owning a home. You just need to know where to look for them. True enough, if you go to a credit union or a bank, the chances are that you are going to come “home” with your tail between your legs. But if you find the right lenders to offer you a bad credit mortgage, you can get the money for that house. However, you should check the broker’s licence to make sure that they’re reputable; you don’t want to be dealing with a loan shark.
Once you find out a trustworthy financial institution, here’s how you can pave the road to taking out a bad credit home loan.
- Make the bad credit mortgage temporary
When you take out a bad credit mortgage, you have to make it short. Get a sum that is small enough for you to pay within a two-year span, which will be just enough to build up your credit score. Once that’s over with, you can go for a regular home mortgage – since your credit can now handle it.
- Go for referrals
If a regular broker can’t aid you with a loan, make a request for a referral. The chances are that most lenders already have contracts with other brokers that may be able to help you out of your predicament with a personal loan or a bad credit loan to purchase your house.
- Don’t go for payment penalties
If possible, don’t agree to payment penalties. This will basically mean that you’ll be paying around six months’ worth of interest just so that you pay off the loan early – which won’t go well for your pocket. Keep in mind that most of your payment in a bad credit mortgage is in interest, and not the actual loan – which means that you’ll be paying six months’ worth of payment that you originally wouldn’t have to.
- Get a co-signer
Many lending companies allow people with a bad credit score to opt for a mortgage, as long as they have a co-signer. A parent or a relative signing for you would assure the lenders so you can get your hands on that bad credit mortgage quicker.
- Choose a mortgage with an adjustable rate
If you pick a mortgage with an adjustable rate in favour of one with a fixed rate, you might not only be able to pay lower interest rates but may even get higher discount points. This will make your mortgage low enough to be manageable.
You don’t have to be “homeless” simply because your credit isn’t as healthy as you’d like. All you need to do is look for the right lenders, and they can offer you a profitable bad credit mortgage.