If you are looking for a mortgage and you have bad credit, it is still possible to get one. There are plenty of mortgage brokers and lenders out there who are willing to lend you some money for a mortgage. But before you start shopping, you need to know exactly what you are getting into and how things will eventually turn out. Well, we are not trying to scare you away but getting a skeptical mind in the right place is essential if you don’t want to be at fault.
Firstly, you need to understand that borrowers with good credit scores will always have an added advantage to those with credit scores lower than a certain limit. While it may sound unfair, the lenders have their own reasons and they amend the rules for people with bad credit. But, if you can understand the essential factors that go into the decision making, you can have a position of leverage to find the best mortgage.
The guide is a simplified version that blends the market research with our expertise in the field to provide you with all the necessary details about bad credits, mortgages, and a step-by-step tutorial on the types of mortgages and advantages if using a mortgage broker over a bank.
Lender’s perspective of bad credit
While you are consumed with all the thoughts of bad credit, we have brought to you the lender’s version of the term and how do they see it. We are trying to induct you with this knowledge because, in the transaction field, it is the lender that decides whether to pursue or not and you understanding their part will help you leverage your position.
Now, bad credit does not simply depend on the credit scores and owe different meanings in the market. However, the experts believe that credit score below 640 is considered as bad credit. But, this is not the case as many can have a credit score of 600 because they were hit by bankruptcy, foreclosure, or short sale a few years ago. In this case, the lender will see your approach to minimize the debt and will generate reports based on your debt paying condition keeping the tab with the worst-case scenario.
However, if you belong to the category of the late payer in the past 12 months, there is a high chance that your application will be right away rejected. So, it is advisable to change your financial habits to secure an improved credit score.