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Saturday, December 13, 2008

Is it Possible to Get a Mortgage with Bad Credit?

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How good is your credit? If you know your credit score and won't admit what the number is because it is so low, you may be worried that you won't be able to get a mortgage. If your credit score is low, getting a mortgage won't be easy, but it is still possible.

There are several factors that determine whether or not you are eligible for a mortgage, and credit score is one of the big ones. If you know right now that your credit is bad, you need to start to take the steps to fix it. To improve your credit, look at how many credit cards you have, how many late payments you have made, how much debt you have and how often you have had checks on your credit to see what you can fix now. If you have good credit, you are going to get a better mortgage rate, but if your credit is poor you might still be able to get a mortgage.

If there is no hope for your credit, you need to look for other ways to buy a house, because a mortgage probably won't ever be granted to you. You can thank these mortgage rules on the downturn of the economy, which is making it difficult for those with bad credit to get a mortgage. One way that those with terrible credit can get approved is to ask someone to cosign the mortgage papers with them. This is risky for the cosigner, because they are putting their credit on the line for you.

If your credit is poor, and you have been trying to improve it and your credit score has been showing signs of improvement because you have been paying your bills on time for the last six months, you have a chance at getting a better mortgage. If this is you, you are going to want to go and shop around at different mortgage companies to see which one is going to offer you the best rate. You might be paying more than most people would pay, but if you keep improving your credit score, you can always remortgage your house in a couple of years to get an even better rate.

If your credit is poor, chances are you are going to get a higher interest loan and the bank will probably make you take out private mortgage insurance if your down payment is not large enough. This insurance is going to add a lot of money to your monthly payments, so make sure to budget it in to the price of your house so that you won't feel any financial pressure down the road. Remember, if your house gets foreclosed, you are going to find that it is near impossible to get a mortgage in the future.

Is it possible to get a mortgage if your credit is so bad that you had to file for bankruptcy or if you've defaulted on a mortgage in the past? Well, right now it is going to be very iffy whether or not you can get a mortgage, if you really want one the best bet is to shop around. You might have to pay a lot in interest for a bank to trust you, and it just may not be worth it.

The moral of the story is you should make sure your credit stays good and that will save you a lot of headaches of getting a mortgage with bad credit.

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