Bad Credit Mortgage Loans: Qualifying for a Good Mortgage with Bad Credit is Easier than You Think

Bad credit mortgages from Sub Prime mortgage lenders are easier than ever to get; however, qualifying for a good mortgage with competitive rates can be tricky with bad credit. If you are a homebuyer with poor credit and are in the market for a mortgage, here are several tips to help you find the best loan without losing your shirt.

The mortgage industry is a fiercely competitive industry. As a result most lenders are tapping any market they can to improve their profits. This includes the bad credit or sub-prime mortgage industry. Ten years ago having bad credit would prevent you from qualifying for a mortgage. Today qualifying for a mortgage with bad credit is easy; you can even qualify for 100% financing of your home purchase.

As a homeowner with bad credit there are steps you can take to improve your credit before applying. The easiest way to improve your credit is to review your credit records for errors, dispute any inaccuracies, and settle with creditors to have negative information removed from your credit reports. Once you clean up your credit history you need to focus on paying all of your bills on time to build up a positive payment history. This process will take you about six months; however, if you don’t want to wait that long you can still apply, just be prepared to pay more.

Your Income is Your Asset

The most important aspect of your application after credit is your ability to repay. Mortgage lenders like to see that you have been employed for at least two years. If you are self-employed this will be more difficult to prove; your lender will need at least two years of your self-employment tax returns.

Your Down Payment

Having the necessary down payment will help your application significantly. Most mortgage lenders will work with you if you have at least 10% down. If you have less than 20% the lender may require you to purchase Private Mortgage Insurance. It would be in your best interest to avoid paying Private Mortgage Insurance as this can add hundreds of dollars to your monthly payment amount. There are bad credit mortgage options available that do not require Private Mortgage Insurance, namely an 80/20 or “piggy back” mortgage.

Private Mortgage Insurance Blues

Private Mortgage Insurance is expensive and does nothing for the borrower. This insurance only protects the lender from losses they incur if they foreclose on your loan. If there is no way for you to avoid Private Mortgage Insurance you will be able to drop it after a certain period of time or at a certain percentage of equity if your payments are current. Ask your lender about the automatic termination or if you can have the insurance terminated early.

You can learn more about your bad credit mortgage options by registering for a free mortgage guidebook.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing: What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

Claim your free guidebook today at: http://www.refiadvisor.com

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