Types of Mortgages for People with Bad Credit
Despite what you may hear in the mainstream media, there are mortgages for people with bad credit. Long gone are the days when lenders were handing out bad credit unsecured loans to anyone with a pulse, but it still is possible to be a homeowner even with less than perfect credit. Poor credit affects ability to invest in a home but doesn't have to make it impossible.
Mortgages for people with bad credit vary depending on how poor your credit is and your current financial situation. One of the types of mortgages for people with bad credit is a manual underwritten mortgage. This is a traditional loan, but is underwritten by a person who looks at your entire situation and not just your credit score. A mortgage loan that is manually underwritten will look at the person as a whole and take into consideration other factors and not just the credit score.
Other types of mortgages for people with bad credit include VA loans and FHA loans. These types of loans are for specific people such as veterans and low-income families who desire to secure a loan. Private loans are also a way to borrow money from a lender with less than perfect credit. Private loans usually come with a higher interest rate but can always be refinanced later. Poor credit affects ability to invest in a home but with enough persistence and research you'll be able to get one, you'll just have to forget about the once popular bad credit unsecured loans.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.
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9 Responses to “Types of Mortgages for People with Bad Credit”
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The other answers are mostly correct, however no interest only loan product allows for interest only payments throughout the term of the loan. They are all limited to a pre set interest only period with 15 years being the longest period I am aware of. These loans can be fixed rates as well. The best one I know of is a 40 year loan term with the first 10 years being interest only. This basically allows you to make smaller payments for the first 10 years, then having a traditional 30 year fixed rate over the remaining 30 years. There are also no rules that do not allow you to pay towards the principal during your interest only period. Many people will take an interest only loan for the security of having a smaller payment when they need it, but paying extra to principle when their budget allows. Anything you pay extra applies directly to your principal balance which will ultimately reduce your payment once the interest only period is expired.August 5th, 2010 at 4:06 am