This article discusses how Bad Credit Mortgage Lenders can help in a poor credit mortgage situation. If you watch television commercials for credit score reporting companies like Freescore, you might think that you can’t accomplish any of your goals in life if you don’t have the right kind of credit. You won’t be able to buy a car, you might not even get an unsecured credit card, but you definitely won’t ever own a house.
It’s true that keeping a high credit score makes things a lot easier when it comes to borrowing money. Those “zero-interest” car loans that dealers offer when they have too much inventory become accessible. So do those credit cards with the point programs that reward you for purchases, instead of coming with membership fees and service fees. The banks will also pay more attention to you if you go in looking for a mortgage if you have maintained a high credit score. The best way to do that is to make all of your payments on time and maintain low balances on your credit cards.
However, there are times when life throws a wrench in your plans. Maybe your wife got cancer and couldn’t work anymore, and even though she had short-term disability insurance, it didn’t last forever, but your bills didn’t decide to leave. You downsized to an apartment, but not before you’d missed enough car payments and credit card statements to drag your credit score down to a place where the banks don’t want to give you a mortgage. You think that your only option is to rent forever.
Is this true? Well, forever is a long time. If you haven’t saved up at least 15 percent to put down on a home, then you might want to rent for another year and save as much money as you can while you also work on your credit score. If you’ve been working hard and have saved up some money to put down, but your credit score isn’t coming up as quickly as it should, even though you’ve been coming current on your obligations, there are still mortgage options available to you.
Amansad Financial has connected many people in your financial situation with mortgage lenders for poor credit to start those borrowers on the path to home ownership. Home loan lenders for people with bad credit don’t look at your credit score; instead, they look at the value of the property you want to buy and consider whether the LTV (loan to value) ratio fits within their parameters. They know that your credit score isn’t high enough to merit a loan on its own, but the fact that you have a significant down payment could make the loan make sense because if you do go into default, the private lender could get all of its money back out of the deal.
How does it work? Let’s say you found a $300,000 house that you would like to buy. Your credit score isn’t good enough for bank approval, but you do have a solid income history at levels that will let you make the mortgage payments within your budget. You also have $50,000 to put down — not quite the 20 percent that banks want in order to make a conventional loan, but enough to get a high-ratio loan from a bank if your credit were good enough.
Private Lenders for bad credit would front the remaining $250,000 for the purchase of the house, and that would become your mortgage amount. The appraised value of the house is $275,000, so even if you default, the lender should be able to get his money back. The term of this loan is only likely to be 1-2 years. You can choose how you set up payments: interest only or amortized over 20 or 25 years. Making interest-only payments allows you to save as much money as you can to add to your down payment at the end of the term. The purpose of this is to give you time to improve your credit so that, by the time the loan comes due, you can qualify for bank financing to take over the loan. You’ll have the equity from the $50,000 you put down plus what you were able to save during the term of the private loan.
Amansad Financial has connected many clients with Bad Credit Mortgage Loan Lenders who helped them get into the home of their dreams. We can do the same thing for you. Get Pre-Qualified through our fast pre-qualification form today!