Obtaining a home mortgage loan with bad to no credit

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Your credit score plays a heavy role on the interest rate you will receive for your new mortgage loan or refinancing from your lender. It also determines if you will get a more favorable fixed rate mortgage than one with a adjustable interest rate.


One major factor is how many late payments (30 days or more, 60 days or more is even worse) are on your credit report. Late payments of less than 30 days do not show up.

The second major factor is your combined credit rating from all 3 credit agencies. If your credit score is 620 or above you will probably be approved for a prime mortgage loan with a lower interest rate. If your credit score is below 620 you will probably be approved for a sub prime loan with a higher interest rate. Remember the lower the credit rating the higher your interest rate will be. Some lenders accept credit ratings down into the lower 500's.

A third major factor is if you claimed bankruptcy in the last 2 years. Most lenders require that your bankruptcy has been discharged for at least one year. Remember, know your credit score before you apply for a home mortgage loan. Knowing this will help you know how much and at what rate you will qualify for. If you have a credit score above 620 I would recommend applying directly through a bank lender than a mortgage broker so you will not get charged brokerage fees and a bank will most likely give you the best rate.

Note: Consumers should know the New Federal Reserve Rules On Mortgage Loans Transfers that help mortgage borrowers by notifying them when their loans get sold or moved to another company.



FHA First Time Home Buyer Program

FHA First Time Home Buyer Programs are available that offer lower down payments (usually around 5% including closing cost) and multiple benefits than conventional loans. When you are seeking a bank lender or mortgage loan make sure you ask them if they offer First Time Home Buyer Loans (some lenders do not). Please read the article on FHA Mortgage Loan With Bad Credit to learn how to qualify for a FHA loan with a low down payment.

Find FHA Home Loans Available With Bad Credit






Buying a home under a land contract

Land Contracts or Agreements for Deed are created through the sale of an existing piece of real estate. This would be where the buyer would give the Seller a cash down payment and in turn, the Seller would act as the Bank and finance the balance of the purchase or sale price.

On a Land Contract or Agreement for Deed transaction, the buyer of the property will not have the Deed to the property transferred to him or her until the Land Contract or the Agreement for Deed has been satisfied. The interest rate and terms will have to be negotiated at the time of sale.

Land Contracts or Agreements for Deed are created on many types of property. Some of those property types would be:

1) Residential (1-4 family)
2) Commercial
3) Mobile Home with Land
4) Land Only

We strongly recommend having the final paper work of the land contract to be notarized and filed with the county recorders office to protect the buyer to prevent any dishonesty from the seller such as the following.

1) Seller takes out a home equity loan on the property
2) Decides to sell the house to another person
3) Files for bankruptcy protection (if he does makes sure he excludes the property)

If the seller has a current mortgage on the house we recommend financing the property in your name with a lender within two years.

If you have 20% equity at the time that you decide to finance the property in your name the lender would then probably require very little or zero down payment from you.

Learn more on the Pros And Cons Of Land Contracts



Rent to own contracts

Rent to Own, also called Lease/Purchase or Lease/Option, combines two agreements which are: a basic lease agreement and an option to purchase agreement. The combination of these two agreements gives the tenant the right to buy the property at a price agreed, but not be obligated to purchase the home until a later agreed date. In the meantime the tenant controls the property and will be able to rent the property for a period of time before the actual purchase. The downside to this is that if you don’t purchase at the end of the lease, your option will expire and you will lose your option deposit and any additional money you have contributed towards option consideration and any money you may have invested into the home. Learn more about Rent-To-Own Homes.

You may want to also read Bad Credit First Time Home Buyer Mortgage Loans

or Bad Credit Home Loan Mortgage Refinancing

If your late on your current mortgage payments, read Stopping A Foreclosure On A Home

If you have a past home foreclosure, please read Credit Repair After A Foreclosure

Learn how to Protect Yourself From Predatory Lenders

How to get the best Bad Credit Mortgage Interest Rates

Learn what to do If Your Mortgage Lender Goes Bankrupt

Avoid and Beware Of High Fee Mortgage Refinancing Rates

Finding Apartments For People With bad Credit

Learn about Home Loans With A Bankruptcy

Although all information has been written in good faith and reviewed, please email us at help@consumerbadcreditguide.com to report any inaccuracies.