Bad Credit – Home Mortgage?
I know there are companies that provide home purchase loans to people with bad credit history. But, is it in the borrower’s best interest to get their mortgage from a bad credit lender?
Not necessarily. There are lenders that work with bad credit customers and do an outstanding job with rates and fees. Of course there are always variables however most specialize with lower FICO scores than a paper lenders. Borrower’s do need to be careful when shopping for the best lender and must compare APR with each lender to get an “apple to apple” comparison. Hope this helps.
I would wait awhile before purchasing a home. Pay off your debt, then try using a guarantor, or a co-signer on your mortgage application. Sub prime lenders might be enticing for people with bad credit, but don’t do it.
Take it from someone who currently has bad credit. I have collection agencies attempting to contact me, but I just ignore them. I am currently tackling the smaller debts first, and working towards my bigger ones. The worst thing that you can do is contact the creditor because they will want their payment at that point. Continue to ignore them and pay down your debt on your schedule. My goal is to be debt free in two years. After that, then I’ll work on buying a home.
The advice that you have so far is pretty sound … I would not ignore collection agencies, but instead be sure to pay what you can manage. As for lending agencies … contact your Better Business Bureau before working with anyone. Some are excellent while some are not.
Many states regulate mortgages – and you have to understand what you are signing up for. I had great experience with “discount” mortgage brokers and I have great credit. But I do understand every number in the paperwork.
Hi Chris, No, you really don’t want to go that route. The interest rates are too high, often they tie you into a balloon payment you cannot afford and you end up losing the home. Flex rates cause the same issues. Realtors want to sell a house and will often times sing the praises of these lenders. They want the sale, they don’t care if you end up homeless or further in debt. Clean up your credit and then worry about buying a home.
Absolutely not! Some of these lenders will charge unethical fees and interest rates up to 50%. It is always best to go through ethical/good credit lenders. There are some good ones out there that will help a person with not so great credit find a way to buy. The government also has some financing options available.
I’ve seen too many people lose it all because they went with the company that would give them credit. The fine print in some of these loan docs can be very eye opening and can be very misleading. Some purposely include double to triple talk to confuse people.
