Getting a Mortgage with a Low Credit Score
The fear of being denied a loan may result in some people with poor credit scores to avoid applying for a mortgage altogether. However, while any serious mortgage applicant will need to give proof of income and other assets, along with a brief explanation of your credit history and how the low score came about, it is not impossible to receive an offer for a mortgage despite your weaker credit score. In fact, recent trends indicate that this scenario is more common than ever. As many as one third of all loans closed in the spring of 2014 were made to borrowers with a credit score under 700 - an increase from the previous year.
A mortgage offer to those with what is considered "bad credit" may be referred to as a "sub-prime mortgage". You can know further details about it at http://money.cnn.com/2013/08/12/pf/bad-credit/. A traditional mortgage at a standard rate is typically not offered to such borrowers due to the greater risk associated with their credit history. That means that sub-prime mortgages generally offer much higher interest rates as compensation for that risk.
To apply for a loan, you can visit badcreditpersonalloanscanada.com mortgages. The institution offering the loan must take a number of factors into consideration in order to successfully conduct a "risk-based pricing" process, which will determine your specific mortgage rate and terms. The better your credit score, typically the better your mortgage rates, even in cases of sub-prime mortgage. Other factors also help the lender decide what rate to offer, such as what types of delinquencies might appear in your credit history report, or how large a down payment you are offering.
Should I Apply for a Mortgage if I have Bad Credit?
Many hard workers had their credit effected in the recent economic recession, and have legitimate reasons for their present credit score. In such cases, a sub-prime mortgage might seem intimidating - after all, why would you agree to lock yourself into a less than ideal offer? However, it is important to remember that if you're working hard to improve your credit score and make your payments on time, you could be eligible to refinance your mortgage at a better rate in as little as two years, thereby securing a better rate and advancing your credit score. Adjustable rates are also an option. In short, a bad credit mortgage is a short-term solution that gets them in a home. It's important to bear in mind that bad credit needn't follow the borrower longer than necessary. Read more from this homepage.
