Mortgage For People With Bad Credit

People with a bad credit mortgages history are finding it increasingly difficult to get a mortgage. The sub-prime crisis has made lenders wary of doling out loans to people with a poor credit rating. Applicants are being put to intense scrutiny, as a result of which, only a minority of people with bad credit are able to qualify for a mortgage. People who have had bankruptcies in the past are finding it next to impossible to get a mortgage and realize the dream of owning a house. Although the housing market seems gloomy for credit-challenged people, there are still some alternatives through which a mortgage can be secured. The following points will take a look at the mortgage options for people with a poor credit history.

Consult a Mortgage Broker:

One of the best ways in which people with poor credit mortgages can avail a mortgage is by taking the services of a mortgage broker. These brokers have the know-how about the mortgage industry, and they can help you in setting an appointment with those lenders who are willing to take the risk of offering a mortgage to low credit score applicants. As most of the large financial institutions are shying away from lending to people with a low credit scores, an alternative lending institution can work for you.

Offer to Pay a Higher Down payment:

For people with a good credit score, a down payment of 5% is good enough to qualify for a mortgage. However, as you have a bruised credit, you might need to put in a higher down payment, usually in the range of 15% to 20% of the total cost of the property. By taking a higher down payment from you, the lender tries to cash in on the high risk they have taken to offer you a mortgage.

Brace Yourself to Pay a Higher Interest Rate:

As we mentioned before, sub-prime lenders want to make the maximum out of lending to applicants with a bad credit, as a result of which, the rate of interest that is offered to you will be relatively higher than that offered to an applicant with a good credit score.