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Bad Credit Mortgage Advice

Mark Cappel
UpdatedMay 28, 2024
Key Takeaways:
  • It is difficult to get a mortgage if you have a low credit score.
  • Work to boost your credit score.

How, with bad credit, do I work toward securing a mortgage?

How, with bad credit, do I work toward securing a mortgage?

Banks want three things in a perfect borrower:

  1. Stable income
  2. Attractive credit history
  3. Low debt-to-income ratio.

If a potential borrower lacks in any one (or more) of these, the potential borrower will have a difficult time getting a loan.

If your credit score is really as bad as you seem to think, you may have a difficult time finding a lender willing finance your mortgage. While I do not think it is impossible for you to find a loan, I expect that you have a lot of work ahead of you, and you should expect to pay a premium in interest and costs for any loan you are able to obtain. Six months ago, I would have been much more optimistic about your prospects for finding a loan, but the sub-prime mortgage market, which offers loans to individuals with credit problems, has taken a nosedive in recent months, making it much harder for borrowers with less than perfect credit to find a loan.

You can apply with Bills.com's lender network by clicking on this page: Free Mortgage Quote.

I do not want to sound totally discouraging, though. Your ability to qualify for a mortgage loan will depend on several factors aside from your credit score, including your income, your performance on other secured accounts, and the amount of money you have available for a down payment. If you have a good income and a sizeable down payment, you may be able to find a decent loan despite your credit problems. I encourage you to visit the Bills.com Home Purchase page for more information about purchase loans and links to find lenders that may be able to help you find a loan.

If you cannot find a loan that suits your needs, you may want to continue working on your credit score. The more you can increase your credit score, the better loan terms you will be able to obtain. A home purchase is a major investment, so do not act too hastily. Take your time to make sure you are in the best financial position possible before buying a home. The Bills.com Credit Resources page offers a wealth of information about credit scoring and advice on improving your credit rating.

The most important piece of advice I can offer is to make sure you do not borrow more than you can realistically afford to repay. The number of repossessions has skyrocketed in recent months due to consumers' inability to keep up with their adjustable interest rates, so make sure that you do not fall into that trap. The risk of running into this problem has decreased significantly in the past few months due to the crisis in the sub-prime mortgage market, but you should still be careful in examining all of the terms of a loan before you agree to it. Spend a few minutes to learn if a no-cost mortgage is right for your situation.

Good luck. I hope this advice helps you Find. Learn. Save.

Bill

www.Bills.com

The mortgage market: what's new?

It is expected that mortgage rates are subject to change. Homebuyers and those refinancing their mortgages should pay close attention to the latest mortgage rate

Mortgage rates April 10, 2024
According to Freddie Mac, the 30-year mortgage rate for the week of April 10, 2024 is 6.88%. This represents a 6 basis points increase from the previous week's rate.
Note: A basis point is equal to one-hundredth of one percent (0.01%). In numerical terms, if the mortgage rate changes by 20 basis points, it means the rate has changed by 0.20%.
According to Freddie Mac, the 15-year mortgage rate for April 10, 2024 is 6.16%. This is a 10 basis points increase from last week’s rates.

Understanding the impact of mortgage rates on your finances
When it comes to determining your monthly payment, mortgage rates are a key factor to consider. Here are the avergage interest rates (APR) for April 14, 2024 based on Zillow data for borrowers with a high credit score (680-740) in the United States:

  • 30-year conventional loan is 7.09%
  • 15-year conventional loan is 6.29%
    Based on the provided rates, a $279,082 30-year mortgage would result in a monthly payment of $1,874. Alternatively, a 15-year mortgage would require a monthly payment of around $2,399.

Explore your options and secure pre-approval today!
To make your life easier, we highly recommend shopping around for mortgages and getting pre-approved. This will streamline the home-buying or refinancing process and make it a breeze. Ready to get started? Check Out mortgage rates now for the best options available.

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