Finding A Good Bad Credit Mortgage Interest Rate

Finding a good bad credit mortgage interest rate sounds like two mutually exclusive things, sort of like having your cake and eating it too, but believe it or not it is possible with a little work and some research to not only quality for a bad credit mortgage but also to get a fairly decent interest rate. You may hit a few brick walls before you find a lender who will actually work with you, but take heart at the fact that they do exist, and they often work with people who have had past credit problems.

Mortgage loans in general are a little bit easier to qualify for than a loan for a car or furniture, or a credit card, one because your creditors will know where you are and the fact that you can’t exactly walk off with your home and head into the hills where creditors will never find you is a contributing factor as well. Also, I always recommend that people check their credit before they even consider bad credit mortgages because you may be surprised to find that your credit score qualifies you for a mortgage, or at
least is so close that with a little bit of work you can get one.

If your credit score is above 650 then you’ll likely qualify for a mortgage at a conventional lender, assuming you have the income to back it up, and your not completely bogged down in debt that demands a monthly payment or payments that equal half of your income. If your score is borderline, like 635 or 625 then you still may be able to qualify depending on the lender, the size of your down payment and what your income is. If you are making a larger down payment than the average amount and your income is good you may be able to qualify.

If your credit score, income or other factors do not permit you to get a conventional loan, don’t worry. There are still lenders out there that will work with you. However, you’ll end up paying for the low credit score with higher interest rates and what are often very uncomfortable terms for the home buyer. These lenders are commonly called subprime lenders and they make up for the risk they are taking by financing someone with bad credit by charging a less than perfect interest rate, as well as possibly additional fees, or terms that protect them in case of nonpayment.

Interest rates for bad credit mortgages will fluctuate all over the place from lender to lender, so make sure that you apply at several different places and discuss what sort of interest rates you can qualify for. Many people are under the mistaken impression that applying at ten different home mortgage lenders will throw their credit score further out of whack, but in fact this isn’t true. Inquires for the same type of lender, over a certain period of time, will not affect your credit score negatively and in fact will only count as one total inquiry.