Can I Lower My Interest Rate Even Though I Have Poor Credit?

Can I Lower My Interest Rate Even Though I Have Poor Credit? Read here for ways to lower your interest rate even if you have bad credit!

For many people with bad credit, purchasing a home is unaffordable because bad credit mortgages often come with outrageous interest rates and high fees. Luckily, there are several ways a person can lower their interest rate even if they have bad credit.

Accept an Adjustable Mortgage

The first way to lower your interest rate if you have poor credit is to accept an adjustable rate mortgage. An adjustable rate mortgage is a mortgage that offers an initial low interest rate for a period of time, which ranges from 3-5 years, but once the initial period is up, the mortgage rate will jump significantly. If you are confident you will be able to sell your home or refinance your mortgage prior to the adjustment date, then getting an adjustable mortgage may be a good idea.

Put More Money Down

The next way to lower your interest rate if you have poor credit is to put more money down. Mortgage lenders require people with poor credit to pay higher interest rates to offset some of the risk they incur by lending to a person with poor credit. If you have the money to do so, putting forth a down payment in excess of 20% of the purchase price will significantly reduce the lender’s overall risk, and they will be willing to lower your interest rate.

Pay More Fees

The last way to lower your interest rate if you have poor credit is to pay more fees. Mortgage lenders typically are willing to lower someone’s interest rate considerably if they are willing to pay higher upfront fees. Typically, if you are willing to pay 1 point (equal to 1% of mortgage balance), the lender will reduce your interest rate 0.25%.

Related posts:

1. How Can I Reduce Bad Credit Mortgage Refinancing Costs?
2. How Can I Reduce Bad Credit Mortgage Closing Costs?
3. How Can I Get A Better Interest Rate On My Mortgage With Poor Credit?
4. Does A Poor Credit Mortgage Cost Me More Money?
5. How Do I Negotiate My Interest Rate With A Bad Credit Mortgage?