How to Get a First Time Home Mortgage Loan with Bad Credit ?

If you think that you cannot be eligible for home mortgage loan due to bad credits it is time to rethink your options. Although good credits and having a lump sum amount as down payment counts as an advantage it is no longer an essential requirement for getting a home mortgage loan.

Due to the presence of a variety of mortgage lenders specializing in different home loan, you can now definitely look forward to a home mortgage loan even with a bad credit. However due to your bad credit you may not be eligible for lower rates. If you are a starter you can also consider working with a mortgage broker in order to get quick results.

So if you want to get a loan with a bad credit here are some things that you need to keep in mind:

  1. Get quotes from multiple lenders: Bad credit home mortgage loans come along with a high interest. So in order to save your finances from drowning you need to look for better interest rate from lenders. Make a thorough research of the market rates and get quotes from the lenders you find suitable to your finances. Settle with the lender who offers the lowest interest rate and better repayment facilities.
  2. Look for flexible mortgage rates: Initially you may have to take a loan a mortgage loan with a high interest rate. This can be taxing on your finances after some time. So you should look for an adjustable-rate mortgage that will allow you to keep your mortgage payments low. This will help you to manage your payments affordably.
  3. Avoid any prepayment penalty terms: If you find that the mortgage loan agreement mentions about any prepayment penalty terms it would be better to avoid it. Accepting a prepayment penalty can lead you to pay additional interest as fines if you pay off your loans early. However you may have an improved credit later and may want to get rid of your debts. With a prepayment penalty you may just end up paying more to the lenders. So it will be better to avoid it.
  4. Try to improve your credit history: If you work on improving your credit history there are high chances that you can get a better rate on your loan. Get a free copy of your credit report and work on repairing your credit. If you find any mistakes you can report it to the credit bureau and have it rectified. You can also take help from a reputed credit repair company to repair your credits faster in order to avail a better mortgage loan.
  5. Reduce your debts: If you are looking forward to a mortgage loan with a bad credit you should work on reducing your debts. This will help in fixing your credits to some extent and after some time you can also expect improvement in your report. If you can reduce your debts within a short time you can expect better interest rates on your loan.
  6. Save Money for Down Payment: Even if you have bad credits you can still get a low interest rates on your loan if you can pay a lump sum initial down payment. In order to do so you need to start saving quite early so you can afford the payment amount when you decide to take the loan.

Author bio:  Sam is a financial blogger consultant with EasyFinance.com. She helps people to tackle their financial problems by helping them with expert advices on personal finance problems related to home loans, home mortgage loans, home equity etc.

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