How Much Bad Credit Can I Have And Still Get A Good Mortgage?
You may find, when trying to apply for a mortgage, that your actual credit rating is not as important a consideration as the amount of the mortgage you are trying to get. While it is definitely much easier to apply for and receive a mortgage with decent interest rates if your credit score is in the 700’s, someone with a credit score as low as 450 or 500 can also obtain one providing that they are prepared that they will have to pay much higher rates, they have a good sized down payment and the amount they are requesting is not exceptionally high.
Yes, You Can Get A Mortgage With A Low Credit Rating But It May Not Be Considered A Good Mortgage
It is possible to get a mortgage with a poor credit rating, however it may not qualify as a good mortgage. The main problem with having a low credit rating is that you will have to pay much more interest than if you had a good credit rating. For example, if you have a higher credit rating you may only have to pay a monthly interest rate of 5.5 percent; this would be considered a good mortgage. However, someone with a poor credit rating may find that their interest rates are as high as 8.5%.
While this may not matter as much if the person with bad credit was taking out a smaller loan, it can really add up to a substantial amount over a twenty five year period. For example, a person paying 5.5 interest over 25 years for a $150,000 loan would end up paying a total of $276,339.37, whereas someone paying 8.5% would end up paying $362,352.19 total.
Is It Worth Getting A Mortgage If You Have Bad Credit
Even though you do end up paying a good deal more for a mortgage, including interest rates, if you have bad credit, many people still find it is worthwhile doing so. Obtaining and then regularly keeping up with mortgage payments will help to build your credit back up.
*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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