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Is it Possible to Get a Mortgage With Bad Credit?

By Edited Nov 13, 2013 0 0

So is it possible to get a mortgage with bad credit? You certainly hope so or else the dream of owning your own sweet home will just be that, a dream. As more and more people fall into bad credit rating, this question seems to become popular. It is ironic that people with bad credit want to own a beautiful home. Why not maintain a good rating in the first place so that it would be easy for you to get a mortgage? But then again, having a place to stay is a basic human need so there is not sense arguing that. Fortunately though, a bad credit rating should not be a problem though. How is that?

The reason is that there is a certain type of loan offered to those with bad credit ratings. They are called mortgage loans for people with bad credit. Yes, banks and lenders have devised a way to cater to the needs of this niche. This type of loan is designed in such a way that both the lender and the borrower benefit from the arrangement. How? Well, the lender gets to charge a higher sum of money for the down payment and the monthly amortization while the borrower gets to have what he or she is borrowing. A win-win situation for both parties!

But what if that is not enough? What if you want to renovate the house that you bought but you do not have the cash? Well, you can opt to get a second mortgage with bad credit. As the name implies, this type of mortgage entails that you are still paying off your first mortgage and you want to borrow some money again to pay for the renovation you were hoping for. You can get this second mortgage but as they say money makes the world go round. Getting it is possible but with a steeper price, even steeper than the first one. So make sure that you think twice before getting one.

On the other hand, if you are really decided to get that second mortgage, keep these points in mind. A second mortgage is definitely a high risk investment for lenders. Given that, mortgage lenders for people with bad credit will charge a higher monthly amortization just to level that risk. These lenders will check whether your home does have equity. They will check if you have a low debt to income ration. And of course, they will check if you will be able to pay the second loan by checking with your employers or checking on your business (or whatever makes you a living).

Hence, getting these types of loans is definitely possible and has already been done before. The key is to consider all the important factors so you do not fall into hole of debt you would not be able to get out of.



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