Solution For Bad Credit Is Mortgage

There are a lot of options available in the mortgage banking industry for those with poor credit. However, this is not an easy undertaking. A mortgage is a long term commitment, usually for thirty years, so you definitely want to find a loan that will be manageable over the long haul. You will need to do some research and weigh your options.Bad Credit Mortgages - What You Need To KnowIf you have less than perfect credit and you wish to buy a home, you will need to research and find several mortgage lenders that can help you in your situation. You will also need to take stock of your current credit status and do what you can to improve your credit scores. There are lenders that will grant you a mortgage with bad credit but be prepared to face higher fees, closing costs and interest because the risk the lender is taking in offering you a loan.For example, your interest rate if you have poor credit can be up to three times higher than if you had good credit. The costs can end up costing you hundreds, even thousands over the life of the loan, especially if you're just making minimum payments. The payments you make on a high-interest mortgage will only pay the interest for a good part of the loan period and not on the principal. So instead of working towards owning your home, it'll almost be like you're renting your home but the consequences of defaulting on a mortgage run deeper than just an eviction. It can lead to foreclosure and further ruining your credit history.Penalties For Bad Credit BorrowersIn addition to higher interest payments on a mortgage, you also face higher closing costs and additional fees, such as mortgage insurance, if you have a poor credit history. You can avoid the high costs that such a mortgage would entail by giving yourself enough time to plan out your home purchase, about thirty to ninety days, perhaps longer depending on your situation. In this time, you should work to try to improve your credit situation by taking action. Improving your credit score before you apply for a mortgage can significantly further your chances of being approved and get a lower interest rate on it.Bringing Your Credit Score UpThere are a number of sure-fire ways to improve your credit score. Start by paying down or paying off as much debt as possible. It's ideal to have almost all debts paid off before you apply for a mortgage. If you have any collection accounts, work with the debt collectors to set up a repayment schedule and have them make a positive notation on your credit report file.Pay off any high interest credit cards and close all the accounts, except for the ones you've had the longest and have a good history. Close credit accounts that you no longer use, especially department store credit cards; having these will not benefit you in the long run. Be sure to regularly check your credit reports from the three credit bureaus for discrepancies and suspicious items. Should you find any, you will need to do so in writing. Search online for form letters that you can use to clear old items (longer than seven years old on your report) and erroneous information from your credit reports. These steps should help you get on the right track to home ownership and help move your mortgage application through the system as smoothly as possible.