Bad credit mortgages for first time home buyers are available if you take the time to look for a company offering this service. Traditional banks are not as apt to provide this service, but many government programs as well as private lenders offer bad credit mortgages, especially to first time home buyers. Many credit unions and online banks offer competitive bad credit mortgages.
How can I get a better interest rate with poor credit?
Prior to applying for bad credit mortgages, request copies of your credit report from all three credit reporting agencies. You are entitled to one free report each year from each of the credit bureaus. Go through your credit report carefully and dispute any and all inaccuracies. It is a proven fact that 80% of all credit reports contain incorrect information. Your credit score will improve once you have removed any bad information. Another thing to consider is for two or three months prior to applying for bad credit mortgages make sure everything is paid on time. Your credit report will reflect with a better score and increase your chances for a better interest rate on your mortgage.
Can I get a mortgage with bad credit?
You can still get a mortgage with bad credit but you will pay a higher interest rate than a regular mortgage. This is not as bad as it sounds for two reasons. One, once you have been approved for a mortgage your credit score will dramatically improve. Homeownership is a large majority of your score and this will increase your chances for further credit at better rates. And second, if you maintain your mortgage properly for at least two years you will be able to refinance the home at a much better rate, again improving your credit score.
*Affects pricing. With the No Closing Cost
Option, borrowers finance the closing costs instead of paying for them at
closing. Borrowers who pay closing costs at closing may qualify for a lower
interest rate. Some upfront fees (ex. credit report and appraisal) may apply
and may be credited at closing.
*Refinancing or taking out a home equity loan or line of credit may increase
the total number of monthly payments and the total amount paid when compared to
your current situation.
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