If you have ever needed to take out a mortgage loan, you probably know what all may be required of you can how to get the loan you need. However, for those who have bad credit, this may not be common information. Just because you have bad credit doesn't mean you can't take out a mortgage. There are some things you may need to know about applying and getting a mortgage with bad credit.
First off, you may be wondering why it matters if you have good or bad credit when you apply for a mortgage. Your credit score and credit history is only a small window into your financial stability and your money habits. Lenders look at your credit score to see how likely you are to pay back any money you borrow. They will take into account if you have any late payments, by how late, and if you fall behind on payments how far behind are you. Your credit score simply tells them what kind of risk you are so they can determine how much money they can loan you if any.
If you do have a bad credit report, don't fret, there is still a possibility that you can get the mortgage that you need. One thing you can do is have some on co-sign on your loan. Getting a co-signer who has good credit, or at least better than yours can help you get the loan you need. Having a co-signer can be a way to assure lenders that one way or another they will get the money that they loan you back and that there is less of a risk when lending you money. The only problem with having a co-signer is that if for some reason you are not able to pay all of your mortgage back, then that responsibility falls on your co-signer. When someone acts as a co-signer for you, there is a certain level of trust between the two of you, and although it does become their responsibility if you fall behind, you really should try to make sure it doesn't come to that.
Perhaps your credit isn't too great, but is fixable. You should try to fix your credit before applying for a loan to help improve your chances of getting one. By having a higher score, the interest rates for the mortgage may be lower, giving you a lower monthly payment. There are many things you can do to try and improve your credit score. You can talk to a credit counselor or financial advisor about your score and they should be able to help you fix it. They may suggest you pay off any debts, get a credit card, or get a new line of credit to help improve your report. Just remember that no matter what, any bad marks on your credit history will be there for at least seven years.
You can also look at getting a mortgage for bad credit. There are several companies out there that actually offer mortgages for people with poor credit scores or history in order to help them rebuild or improve their score. This is a great option because they can work with you to help you meet your goal. Remember to do your homework and research to make sure that what seems like a promising deal isn't a scam. You will also want to find out what each lenders rates are and what they can offer you in terms of a bad credit mortgage.