Bad Credit - Mortgage

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Bad Credit First Mortgage

It is still possible for a person with bad credit to get a first mortgage despite the collapse of subprime mortgage lending.

The main thing that a person with bad credit will need to get a mortgage is a good income that will enable the person to make the mortgage payments. This means that an individual with a good job but a bad credit rating should be able to get a first mortgage fairly easily. The individual will have to pay a higher interest rate because of the bad credit rating.

Low mortgages interest rates

The extremely low mortgage interest rates being offered should help people with bad credit scores because they’ll still be able to get a lower interest rate. The low interest rates mean that a person with bad credit might pay 7 or 8 percent interest on their mortgage which could still be a good deal especially if inflation goes up.

Federal tax credit

Another factor which may help people with bad credit scores get mortgages on their first home is the first time home buyer’s tax credit offered by the federal government. This credit makes $8,000 available tax free to first time homebuyers who qualify. This will make it easier to pay off the mortgage by reducing the long term cost of the mortgage.

The credit will enable mortgage lenders to cut those with bad credit some more slack. For example the credit could take the place of a down payment or augment a down payment. The more you pay up front the less you’ll have to pay have back in the long run. This will enable the mortgage lender to offer a better interest rate in the long run.

A large down payment is good for your bad credit first mortgage

Having a large down payment available will always help you get a better deal on a mortgage. A lender will be more willing to work with a first time homebuyer with bad credit.

One advantage first time home buyers have right now is the lousy real estate market. Since home prices are falling and houses are sitting empty realtors and lenders are more likely to work with homebuyers. Home sellers are more likely to lower prices and help buyers purchase a home.

Home sellers maybe more willing to carry or guarantee a mortgage which can help a person overcome a bad credit record. If you see a home you’re interested in that’s been sitting unsold for awhile you should check and see if the seller is willing to carry the mortgage to unload it.

A good way to start your home search is to talk to mortgage lenders and realtors in your area. They can tell you if you can afford a mortgage and what sort of deal they’ll give you on a mortgage.

Today’s housing market favors sellers including first time homebuyers and those with bad credit. Anyone who wants to buy their first home needs to take advantage of this market while it lasts.