| Is it possible to get a loan even with a low credit | | | | In exchange for letting these types of customers |
| rating? With today's mortgage and loan trends, a | | | | get mortgage loans, higher interest rates are |
| bad credit mortgage is absolutely possible. | | | | charged. This helps protect the lender should |
| In the past, applying for a loan involved a | | | | something happen and he has to foreclose on the |
| thorough check up on your credit history and | | | | property. |
| income background. If your history was less than | | | | Discount Points |
| perfect or if your income was not that high or | | | | Discount points on higher risk mortgages are |
| both, then your application for a loan was instantly | | | | common. A discount point is calculated by using a |
| rejected. This practice limited the number of | | | | percentage of the total borrowed amount. High |
| people who could apply for a loan. | | | | risk borrowers are charged higher discount points, |
| Today's market has adopted more flexible | | | | usually four to five points. Those with good credit |
| methods. Special mortgages make it possible for | | | | may not pay these points or they do but only a |
| people with low credit scores to still apply for a | | | | very low percentage. With bad credit loans, |
| loan and get approved. When applying for one of | | | | however, points may go as high as ten, although |
| these loans, no pre-qualification process is involved. | | | | going this high is not a common practice and is |
| Lenders who offer poor credit mortgages as part | | | | against federal law. It all boils down to insurance |
| of their loan offering give their customers a | | | | for the lending company. Lending companies want |
| chance to redeem themselves. With this special | | | | to make sure that they're getting their money |
| loan, your credit history is nothing more than | | | | back from their higher risk customers. |
| history and you still get your money's worth. | | | | Larger Down Payments |
| There are several lenders who offer these | | | | The amount of down payment required for |
| programs. When you choose one, make sure that | | | | borrowers on risky loans is larger compared to |
| you've learned everything that you need to know | | | | types. In exchange for ignoring the customer's |
| about them. More often than not, bad credit | | | | credit history, lenders require larger down |
| mortgages sound too good to be true so it's best | | | | payments towards the total purchase price. |
| if you keep an eye out for the catch. | | | | Borrowers may not be able to afford the upfront |
| Higher Interest Rates | | | | price of poor credit mortgages. If, in any case, |
| Poor credit mortgages are usually characterized | | | | you can afford the down payment required, one |
| by high interest rates. Lenders charge borrowers | | | | of these loans might even prove a good thing for |
| higher interest rates as compensation for the risk | | | | you. Since the down payment you make takes |
| they take. Like it or not, borrowers who don't | | | | up a considerable portion of your purchase price, |
| have decent credit records are loan risks and are | | | | this can reduce your monthly payments. |
| viewed as such by lending companies. | | | | |