Bad credit mortgage lenders offer people with less than perfect scores on their credit reports the hope of owning their own homes. By offering higher interest higher fee sub prime mortgages, bad credit mortgage lenders offer the chance for people with bad credit to own their own home.
Home ownership is part of the American dream. But, the average cost of a home is six to ten times an average person’s salary depending on what part of the country you live in. The only chance of owning a home for an ordinary person is to take out a mortgage. If you have bad credit, it means going to bad credit mortgage lenders.
Many things can happen in people’s lives to put them in a situation where they have bad credit. It may be the result of overextending yourself. It may be that you are bad about paying bills. You may have also had situations outside of your control like a major medical crisis or unexpected layoff. In any case, bad credit mortgage lenders give you a chance to achieve the American dream of homeownership.
Unfortunately, it is not as simple to get yourself out of a bad credit situation as it was to get into it. There are some things you can do immediately to improve your credit score, but other options take years of steady payments to improve the bottom line.
One thing you can do immediately is to obtain a free copy of your credit reports. Then, go through and see if there are any errors. If errors exist, report them immediately. The credit bureau has 30 days to confirm the debt. If they are unable to, then they must remove it from your records. This can help your credit score tremendously.
When you are thinking about buying a home, make sure you make all your payments on all of your bills on time for at least a year. This will improve your chances of getting a good rate on a loan.
But, when it comes to actually buying the home, you may find that you have no choice but to go to bad credit mortgage lenders. This will mean that you have a higher than average rate on your loan and you may also be required to pay extra points. The lender may also require that you take out insurance to secure the loan.
If you agree to these terms, you have a good chance of improving your credit over the next couple of years. That is because when you make payments on a home, it improves your credit score. After 24 months, consider refinancing the home because you should be able to get better rates after you have had the time to rebuild your credit.
Bad credit mortgage lenders offer subprime loans because the risk they take that you won’t pay them back is outweighed by the higher rates and fees you pay. That’s how bad credit mortgage lenders make their money.