How to get Mortgage despite having Bad Credit?

There are stories all over the media and urban legends that a consumer must always live in a rental home or with parents because they suffer from a low Credit score. Not true. The mortgage market is loaded with lenders who are willing to take a chance on someone with bad credit. Often the consumer is left with a high rate, adjustable and restrictive terms, but they will own their own home, and have a good jump off point to increase coveted Credit Score and start building personal wealth.

All professionals recommend the bad score be avoided but life does not always go as we have dreamed, but when things do go wrong the same professionals have lists of advice to help get started again. SUB PRIME MARKET Opposite the traditional prime lending market which is open and available to high and average credit scores is the Sub Prime Mortgage Market.

This is a growing market and is becoming very competitive. The Sub Prime lenders further divide that market into four classifications: A and B are the lower risk in the prime mortgage market. These consumers have low scores for some reason such as divorce or medical bills. This market looks at the reason for the score and the ability to pay the monthly payment as much as the score it's self.

The C and D classification are those with more risk involved. The terms of the mortgage will be higher and restricted than that of the others, but the consumer can purchase their own home. The more your history shows that you are trying to improve you the better the terms. These mortgages again, carry higher mortgage rates and fees that a prime market lender will not. But the consumer should already be prepared to pay a little more for the privilege of the lender risking the money.

The market is very competitive and a consumer who is in the D spot will be able to get a mortgage decent terms. Don't just take the first lender, check the online tools, referrals from family and friends. The best option is to hire a broker who has relationships with many lenders and given the proper amount of time, will be able to come up with a pretty good deal.

A good down payment will encourage the lenders to compete because the large down shows them that the consumer has the means and is serious about the purchase. The lenders are stricter with the debt to income ratio and that the property is in good condition to be financed.

Again, give the broker time to find you the best deal as the process is longer than prime mortgage market. PRIVATE LENDERS Yes, the original lender from history is still in the business of lending money. A private lender is an individual with expendable cash and will loan the money as and avenue for investment and if the right borrower is chosen the rate of return is higher than other investment types.

The private lender is still going to look at the credit history and do a background check on potential clients. The loan is made with the understanding the loan has interest and will be repaid. Many of the sub prime market lenders will charge up to 16-24% interest for a consumer with credit issues, where the private lender may only charge 12-18% interest.

This type of lender can close the deal faster than the lenders due to the absence of the bureaucracy and restrictive guidelines that bog down the other lenders. LEASE TO OWN is a program designed to help the consumer purchase a home when there is no other solution for financing available. The program is much more limited than others as far as the actual property available but has many options available to the home buyer.

The day you sign the contract and move in you are considered the owner. You pay a standard rental for the value of the property, a portion to work toward the down payment and taxes and insurance. As far as the maintenance and upkeep, you can live as if it is already yours. At the end of the lease term of one year the consumer is encouraged to exercise their option to Purchase, however if more time is needed the lease may be renewed for one more year with an increase in purchase price.

If unable to obtain a traditional or assisted down payment to get financing, there are some programs under which some funds are available for Down payment assistance. The best option of all is to get the credit score score up and with stable income and a healthy down payment the consumer can expect the lenders to compete for their business.

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Gurmit loves travelling, he has been to over 70 countries. He speaks fluent Cantonese, Polish, Hindi, Punjabi and English. Gurmit is an author, writer, insurance and mortgage expert. He frequently writes on various topics of interest to his readers. To get in touch with Gurmit Singh, please visit his website www.gurmitsingh.ca

Gurmit Singh is a licensed mortgage expert with Dominion Lending Centres Mortgage Villa.

Gurmit Singh, mba
Mortgage Expert
M08009905
Dominion Lending Centres Mortgage Villa (11574)
Email:gurmit@gurmitsingh.ca
Website: http://www.gurmitsingh.ca