Bad credit lender loan mortgage providers require borrowers to provide financial documents verifying they can repay their mortgage note. Borrowers need to provide tax returns, payroll stubs, income and expense reports, and bank statements.
Borrowers facing foreclosure might be able to obtain refinancing through bad credit lenders. Those owing more than their home is worth may not qualify for a loan. If no one will refinance your mortgage note, contact your current lender and request a short sale.
When lenders enter into short sale arrangements they agree to accept less than is owed on the mortgage loan. The borrower must locate a buyer within a certain period of time. Once the sale is complete, the borrower walks away from the home without owing additional money.
Some lenders will enter a Deficiency Judgment against borrowers for the difference between the note balance and sale price. Careful consideration should be considered if your lender engages in this type of shortsale.
Expect to pay higher interest rates when obtaining bad credit lender loan mortgages. Currently, interest rates are at an all-time low. Shop around and compare rates charged by various bad credit lenders. Make note of closing costs and determine if lenders impose pre-payment penalties.
Borrowers who obtain mortgage loans through bad credit lenders should work toward improving their credit scores. Pay your mortgage note on time. When possible, pay a little extra. Some lenders allow borrowers to pay bi-monthly. This plan can make it easier to stay on track financially.
Use caution when selecting bad credit lenders. Unfortunately, there are unethical businesses that prey on desperate homeowners. Use the Internet to conduct research and ensure you are working with a reputable lending company.
If your FICO score is lower than 525, you probably won't qualify for a loan through bad credit lenders. Consider renting affordable housing to establish credit-worthiness and repair your credit history. Setup a savings account and start contributing toward a down payment.
One option available to buyers who do not qualify for mortgage loans is seller carry back financing. Using this type of real estate transaction, sellers carry all or a portion of the loan for two to five years. This allows the buyer to improve their credit; allowing them to obtain a traditional mortgage loan at the end of the agreement.
A second option to bad credit financing is rent-to-own homes. When tenants engage in rent-to-own, a portion of rent is applied toward purchasing the home. Tenants rent the property for two to three years to establish a payment track record. At the end of the term the accrued rent is applied toward the purchase price. Lease-to-own contracts can be written to address the needs of all parties involved.
Although bad credit lenders can provide a solution to financing problems, they can also lead to financial ruin. Thoroughly research all financing options before making a final decision.
About the Author
Simon Volkov offers information and resources to help individuals with money management, locate a bad credit lender loan mortgage provider, eliminate debt, avoid foreclosure, and more. Discover options to help you become debt-free at www.SimonVolkov.com.
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