Applying With Bad Credit Mortgage Companies In Three Easy Steps
They tell us that applying for a loan with bad credit mortgage companies is easy, and that qualifying for one is simple. What is left out of that statement is that our credit scores need to be somewhere in the ballpark of 770, or even 720, or it won't be as simple and easy after all. Not if you want a low interest rate.
From the viewpoint of the mortgage company, it is just good business for them to either turn away giving mortgages for people with bad credit, or at the very least raise the interest to a higher rate. It is all about how much risk is involved in lending a poor credit person money, and how much of that risk a mortgage lender is willing to expose their company to. The higher interest rate simply balances out the risk. All of this is presumptuous of the actual credit worthiness of the person wanting the loan. It is not giving the complete of the borrower to look at just the score. But in the world of mortgage loans with bad credit, most companies won't get past that three digit number.
There are, however, a select few companies dealing in bad credit home loans, or even bad credit refinancing, who do take the time to look beyond the credit score of the borrow, to understand the story behind the credit rating of their potential customer. As that borrower, it is your task to seek these companies out and approach them. Despite what most people are led to believe, it is not the end of the world for those borrower's who find that their credit score has now fallen under that ideal score of 670. While it is a fact that any person sporting a 670 credit score or higher will have a less difficult time in finding a mortgage loan, it isn't an impossible thing to do for those whose score is less than that.
There are three steps involved when applying for a mortgage with poor credit:
1. Go online and use a mortgage calculator to figure what size of loan you're best qualified for.
Before you even approach a mortgage lender, get the details of loan amounts and interest rates, so that you know what kind of loan payments you can handle. Be realistic in your view of this important piece of information. You want an affordable payment amount.
2. Develop a list of this poor credit mortgage loan companies.
Once you know the amount of loan you can comfortably afford to make payments on based on size and interest rate, you can go ahead and discover what companies exist that will look at you as a potential customer. You want to focus your attention on those companies that deal mainly with bad credit people. It will be much easier to successfully acquire that loan you found you could afford in step one above if you narrow your list to just those who don't simply go by credit rating alone.
3. Deal with each company separately, and be prepared to negotiate.
This is where the rubber meets the road. You are now going to get in touch with all the companies on the list you developed from step two. When you approach each of them, make certain that your details on the loan are identical with each company. This means the loan amount, the down payment you are prepared to make, and the length of repayment (i.e., how many months to pay it all back - typically 360 months or 30 years). You can't compare companies unless the deal is the same for each. Most important, however, is to take your time in negotiating with each loan company, and don't give in so easily. Isolate each negotiation, meaning don't look at what other companies have offered you before. Just focus on the one company you are negotiating with at the time, separate from the others you have already dealt with.
As with anything, tell the truth about your score. Don't try to fluff things up on your loan application. Lenders dealing in poor credit borrowers are not going to chase you away just because you have a lower score. This is what they specialize in. So be truthful with them, and they will be able to work with you.
Using these three simple steps, you should be able to find bad credit mortgage companies who can offer you the perfect loan that you can handle.