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Bad Credit Mortgage and Refinancing

By Edited Jan 3, 2014 0 0

Everyone wants to own their own home. Owning a piece of land and a house built on top of it that you can call your own is every man's dream. Nothing beats being able to tell your kids or grand kids that you have your own home and leave a legacy for generations to come. However, these dreams come with a steep price nowadays. With the state of the economy today, more and more people give in to having a bad credit score just to be able to survive on a daily basis. And because of that, it is hard for them to get a loanor at least that is what they thought.

These people think that since they have a bad credit rating, banks do not love them and would not lend them a penny. On the contrary, banks would love to lend to as many people as possible whether you have a good rating or not. That is why bad credit mortgages are the rage nowadays. Banks make money by giving out debt and charging a fee for doing so. Yes, you can own your own home even if you have a not so good credit rating.

Anyone can get a mortgage with bad credit. You can even get a mortgage without a credit score history! But first let us clarify what this type of loan is. Since you are reading this article, I assume that you are familiar with mortgages. If not, mortgages are loans that have housing as collateral. So, if you take out a loan with a bank, the bank pays for the house and you pay the bank a down payment and a monthly amortization. The house is not yours until you pay the bank in full. That is how mortgages work. Now, if you are healthy financially, you just pay your monthly dues and the house will be yours in a few years time (depending on your amortization plan).

On the other hand, if you are not well off financially and you miss your payments every now and then and cause your credit rating to drop, you can still get a loan from the bank or from a private lender. That is what we call a bad credit home loan mortgage. It is a home loan for people with bad credit. The downside to this is that you would need to pay a larger down payment and a bigger monthly amortization. Don't worry that your application won't get approved. On the contrary, lenders would love you because they make more money from this type of loans.

Once you have the loan approved then you are all set. But getting the best deal doesn't stop there. After a few years time, you can get a bad credit mortgage refinance loan. In simple terms, you can ask your current lender if they are willing to modify your current payment terms that would benefit both of you. If not, you can turn to other lenders that would pay off your loan and then pay them instead under new and better payment terms.

So you see, a bad economy and a bad credit should not be a hindrance to owning your dream home. It just takes a bit of know-how and patience.

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