Bad Credit Mortgages
There are many home loan options available for individuals with bad credit who have been turned down by major banks.
While you might not be able to qualify with a prime lender at the lowest possible mortgage rate, there are many institutional lenders and private lenders who specialize in mortgage products for individuals with bad credit scores.
For individuals who have low credit ratings lenders will look at additional factors in approving mortgage loans for them. These factors are listed below:
Prime Lenders can still work with a credit score between 600 and 700, provided you can demonstrate that you have a dependable source of income which is verifiable and you are declaring this income in your income tax return.
Equity (If Refinancing)
Lenders will allow you to increase your mortgage up to a maximum of 85% of the value of your home. However, they will always prefer to lend when you have more equity on your home, as the loan is backed by more secured asset.
Downpayment (If Purchasing)
The higher your down payment is the better. A large down payment demonstrates to lenders that you can save money and you have more at stake in the property. Typically, the better your credit the lower the down payment.
Property Type And Value
Your property type is probably the most important factor for a lender who is lending mortgages for an individual who has a low credit rating. To qualify for these mortgages your property must undergo a strict appraisal and be rated average-to-good before you can be approved for a mortgage. The property is the main security for these lenders as other factors such as credit rating and income might not be strong for the borrower.