If you have bad credit and have been thinking of buying a house or refinancing your current mortgage you have probably run into a few problems. With the economy in it’s current recession, lenders have tightened down even more on lending requirements and have raised the credit score requirements to qualify for mortgage loans. Are there even bad credit mortgages out there for people to quality for? The answer is a nice loud YES!

The primary bad credit mortgage product is called an FHA mortgage. FHA stands for (Federal Housing Administration) and is insures 100% of the loan amount that a lender funds to a borrower as long as it fits within FHA guidelines. This is nice because you can get an FHA loan from any large bank or the bank of your preference so it really opens up your options to getting the best mortgage loan interest rate.

FHA guidelines have less stringent guidelines than a regular conventional loan. What exact guidelines do you have to follow to achieve an FHA loan you may ask? The guidelines to be able to qualify for an FHA loan if you have less than perfect credit is as follows;

Regardless of how bad your credit is you must not have any lates or collections that have happened within the last 12 months. The only way to get away from this guideline is if you have a high credit score. If you have a high credit score above 720 than your score will compensate for blemishes that have happened within the last year on your credit report.

FHA just recently announced that you must have a mid credit score of at least 620. This used to not be the case. Out of your 3 credit scores the middle number must be above the 620 score to even be considered for an FHA mortgage loan. Mos people that have bad credit usually have above a 620 credit score so this requirement is great for someone seeking a bad credit mortgage product.

All Collections, liens, and judgments must be paid prior to the closing of the loan. Its totally ok if you have had collections, or judgments in the past, but they must all be paid off before the loan can close. The reason for this is that if you have an open collection or judgment, those types of accounts take first lien position on the property you are buying. This means that if you lost your house the collectors would get the money first before the lender who loaned you the home loan. Lenders simply do not go for this on an FHA mortgage.

We have just barely scratched the surface on FHA loans but hopefully if you have bad credit you have been filled with some hope of being able to purchase a home or refinance your existing home.

By: Scott Paul

If you are an individual with poor credit you might think a mortgage is just out of your reach. There are many mortgage lenders today that specialize in writing bad credit mortgages making it much easier for people with poor credit to qualify. Here is what you need to know before shopping for a bad credit mortgage loan.

As little as ten years ago if you had bad credit it was nearly impossible to qualify for a mortgage. Since this time an entire industry has sprung up around poor credit mortgage lending; there are now lenders that specialize solely in writing bad credit mortgages. it is important to understand that because you have a poor credit rating you represent a much higher risk for lending. Because of this risk you will pay more for almost every aspect of your mortgage. It is important to shop around for the best bad credit mortgage to minimize these additional expenses.

One important aspect of this bad credit mortgage is that you must find a lender that does not include a prepayment penalty in the loan contact. A prepayment penalty is a fee the lender charges if the loan is refinanced or you sell your home before the penalty expires. Prepayment penalties can be quite expensive; many mortgage lenders charge as much as six months worth of interest on 85 percent of the original mortgage loan balance.

Your goal for this mortgage should be rebuilding your credit. After two to three years of on-time payments you will want to refinance the mortgage with a traditional mortgage lender. You do not want a prepayment penalty preventing you from refinancing this mortgage. To learn more about your options for securing a mortgage with poor credit and how to avoid common mistakes, register for a free mortgage guidebook using the links below.

By: Louie Latour

Many who have less than perfect credit mistakenly believe that home ownership is out of their reach. However, there are bad credit mortgage lenders which can help. There are several avenues for such loans.

One route is to secure a cosigner. If you have someone who will be willing to cosign for your mortgage, then the lender will base their underwriting on the co-signer’s credit as opposed to yours. Many use this technique to great success.

Another possibility is a new emerging trend of peer to peer mortgages. Several web sites exist which put together people who desire return on their money with others who require a loan. The risk is spread among many small lenders. You might pay a higher interest rate, but it is definitely a path worth investigating.

Some private social organizations have programs to assist with home ownership for those who qualify. Most typically, there are strict income limits. Credit score is not a large factor in reference to these loans. You should research which groups exist in your community and explore whether any of their programs are relevant to you.

The most common route for those with bad credit to secure a mortgage is through an FHA backed mortgage. FHA stands for the Federal Housing Administration. It is a government entity created to encourage home ownership among groups typically shut out of the process.

FHA backed loans do not have a minimum credit requirement. The only stipulations are that you do not have a bankruptcy within two years, nor a foreclosure within the past three years. Other than these requirements there are no other credit standards.

Another good facet of FHA backed loans is that the down payment requirement is much less. Typical loans require twenty percent down payment whereas FHA backed loans usually only require three percent.

If you have poor credit there is still an opportunity to buy a home. So don’t just give up with the thinking that you are doomed from the start at reaching a decision. Lenders are human too and they have to understand that people need homes to live in as well. Bad credit mortgage lenders are there for those who know where to look. Do a little research and you might be pleasantly surprised. Many do not do this therefore suffer from the vision that they can never get a loan for their homes. Be smart and play right and you will have the loan you need.

By: Adam Hefner