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Bad Credit Mortgage Loans

June 26, 2012

Bad Credit Mortgage Loans

A bad credit mortgage loan is a specialized mortgage loan designed for customers with credit issues. Bad credit mortgage loans are easier to qualify for than regular mortgage loans, because they have more flexible credit and income requirements. There are various types of bad credit mortgage loan programs, but most of them tend to be adjustable rate mortgage loans as opposed to fixed rate mortgage loans.

Bad credit mortgage loans usually have higher interest rates and higher down payments than regular mortgage loans, so most people prefer to use a bad credit mortgage loan simply to get into a home and help rebuild credit. Once they’ve been in the home for a year or two, people typically refinance the bad credit mortgage loan with a regular loan.

  • Key Factors
  • Pros & Cons
  • Higher Rates

Key Factors

  • Bad credit mortgage loans are specialized mortgage loans designed for customers with credit issues.
  • Bad credit mortgage loans have easier qualifying guidelines than regular mortgage loans-bad credit mortgage loans have a higher risk of default (foreclosure) than regular loans, so they typically have higher interest rates and higher monthly payments.
  • Bad credit mortgage loans are usually adjustable rate loans-they are normally used to help get into a home and rebuild credit, and are then refinanced after several years for a regular mortgage loan.

Pros & Cons

Pros

  • Bad credit mortgage loans give borrowers who might not otherwise be able to qualify for a mortgage the opportunity to purchase or refinance a home.
  • There are many bad credit mortgage loan programs available today, so there is a bad credit mortgage loan for almost every credit and income situation.

Cons

  • Because bad credit mortgage loans have a higher rate of default (foreclosure), they typically have higher interest rates and monthly payments than regular mortgage loans.
  • Bad credit mortgage loans also typically require higher down payments than regular mortgage loans.

Higher Rates

Bad credit mortgage loans are specialized mortgage loans designed for borrowers with credit issues. Because bad credit mortgage loans have higher rates of default (foreclosure), they tend to have higher interest rates and higher down payment requirements than regular mortgage loans. The higher interest rates mean that bad credit mortgage loans also tend to have higher monthly payments than regular mortgage loans.

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Rebuild

Bad credit mortgage loans are typically adjustable rate mortgage loans, and they are typically used to help purchase or refinance a home and begin rebuilding credit. Once borrowers have re-established good credit, they typically refinance the bad credit mortgage loan with a regular mortgage to take advantage of the lower interest rates available with regular loans.

Filed Under: Credit Scores, Uncategorized Tagged With: bad credit mortgage loans, mortgage loans with bad credit, pros and cons of bad credit, pros and cons of mortgage loans

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When inquiring about a mortgage on this site, this is not a mortgage application. Upon the completion of your inquiry, we will work hard to match you with a lender who may assist you with a mortgage application and provide mortgage product eligibility requirements for your individual situation.

Any mortgage product that a lender may offer you will carry fees or costs including closing costs, origination points, and/or refinancing fees. In many instances, fees or costs can amount to several thousand dollars and can be due upon the origination of the mortgage credit product.

When applying for a mortgage credit product, lenders will commonly require you to provide a valid social security number and submit to a credit check . Consumers who do not have the minimum acceptable credit required by the lender are unlikely to be approved for mortgage refinancing.

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