title:Bad Credit Mortgage ? Sometimes Bad Credit History Can Be Rewarded? author:Troy Francis source_url:http://www.articlecity.com/articles/business_and_finance/article_5340.shtml date_saved:2007-07-25 12:30:07 category:business_and_finance article:

When you have bad credit you wonder what lenders will offer you for a mortgage deal on your home. The big obstacle, as you know, was your bad credit history. To add to the all the fears, there were a few pals of yours who held that the deals offered to you will not be as good as regular mortgages.
However, before you decide not to mortgage because of bad credit history, let me say, mortgage lenders generally do not give much importance to bad credit history. Through this article, we will inform borrowers of bad credit mortgages which are basically mortgages for the people with bad credit history and the options for bad credit.
Ok! Why is it that mortgage loan providers ignore bad credit history while offering bad credit mortgage? Is it because they don?t fear for payment? Well, fact of the matter is that most borrowers with bad credit history do pose a higher risk on the loan. Will the borrower default this time? Who really knows!
Therefore, how will loan providers agree to lend to borrowers with bad credit history is really hard to say. Making the decision to lend bad credit mortgage is mostly influenced by the credit score of borrowers. Your credit score is demonstrated by taking into account the borrowers? credit file. FICO score, which is generally accepted by the major credit agencies, and mortgage lenders too.
Borrowers with a credit score of 710 and above will have most mortgage lenders running after them to take mortgage loans. Borrowers that have a credit score in the range of 620-700 can also get good deals on mortgages. But most borrowers who earn a score of 500 and below are the ones who form the customers of bad credit mortgage.
Through the process of bad credit mortgage, the borrower will make purchase or construct a home. If this is a first home purchase, most borrowers can are eligible for the some discounts available to an individual who is taking on a first time mortgage.
However the amounts available under bad credit mortgage will not be as much as the good credit mortgages. In most cases the lender may ask for a larger deposit. While the deposit on regular mortgages ranges up to 27%, the percentage of deposits under bad credit mortgage will be higher. Deposits will shows that the borrower is committed towards the mortgage. If borrower fails to repay the mortgage, he or she will lose their deposit.
Interest rates on bad credit mortgages is largely disputable. Many lenders allege that their act of approving the borrower a mortgage was a favor; the borrowers wouldn?t have been able to mortgage their house had they not associated with them. Borrowers who have been refused mortgage loans or other credit lines a few times will easily accept the statement. Borrowers like this will often fall prey to the lenders who charge huge sums of interest and fees on the bad credit mortgage.
However, determining a reasonable interest rate is not as hard as you think. Keep in mind that your will be higher than that of someone with good credit. One can easily estimate the interest rate by making a comparison of interest rates charged by principal lending banks and other financial institutions. Mortgage calculator has a record of the interest rates for several categories of mortgages. When looking into the bad credit mortgage category, you know of the least rates prevalent for the category. You can also confirm that the interest rates found are correct through a mortgage quote from another lender. Mortgage quote is an offer by a lender to the borrower to accept bad credit mortgage with some stated terms attached.
Another important use of mortgage quotes is to help borrowers in choosing a particular lender that will fit their needs. If the terms are alright with the borrower, and he finds that the terms offered a particular lender are the best of all lenders, he can choose to accept the bad credit mortgage offered by that lender.
Bad credit mortgages give borrowers a great second chance to improve their credit history. Also paying off the repayments on bad credit mortgage will give them a positive mark on their credit file. But if they choose to follow the same approach as in the past defaulted debts, they will continue using the bad credit mortgages for years to come.


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