Frequently Asked Questions About Mortgage Loans for Lenders with Poor Credit Ratings

If you are buying a house for the first time, but you have poor credit, you doubtless have plenty of questions about getting mortgage loans. Here are some of the most commonly asked questions about qualifying for mortgages with bad credit.
Will a poor credit rating completely disqualify me from getting a home mortgage?
You can get home mortgages even if you have a bad credit rating, but beware: Bad credit attracts bad lenders whose mortgage loans come with high fees and unethical, potentially credit destroying terms. Choose your lender carefully, and consider holding off for several months while you improve your credit rating.
What are the clues that certain mortgage loans are predatory?
There are a substantial number of tipoffs that a loan is bad. The top ones are:
* Interest rates noticeably higher than the market average * Fees that add up to more than 1% of the total cost of the mortgage * Early payment penalties * Kickbacks to the agent (often referred to "yield spread premiums") * Aggressive marketing tactics * Lenders who advise you to offset a high interest rate by refinancing your property frequently, sometimes called "flipping"
If you see any of these signs, reject the offer. If you are offered only mortgage loans that contain these issues, then that is a sign that your current credit rating is too low for you to qualify for mortgage loans from legitimate lenders. But dont give up hope. Improving your credit score will make you desirable to good lenders.
How can I raise my credit rating?
Raising your credit rating will take effort and you will need to wait several months for the improvements to take effect, but its worth your time. The best ways to improve your score are:
* Pay down your existing loans. Catch up on all your late payments and keep your payments up to date. * Be absolutely certain to pay all your bills by the due date. * Increase the amount of credit available to you, which will improve your ratio of debt to available credit. * If you are having difficulty because you have no credit history, get a credit card designed for people with nonexistent or poor credit.Avoid credit cards with dangerously high interest rates, monthly or weekly fees, or other riders that will put you in an even worse credit situation. * Check all your credit reports and contest any inaccurate information on them.
When you have taken all the steps available to you, wait. The factor that will do the most for your credit rating is time. As you create month after month of newly stable credit history, your credit rating will go up and lenders will look upon you more favorably. Wait long enough, and you will qualify for excellent mortgage loans once more.

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by: marciafreeman
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