Bad Credit Mortgage

Posted by admin on November 24th, 2009 at 04:51pm

Question:
Bad Credit Mortgage?
I do not have horrible credit, however it’s not spotless. I have been tardy on two credit card payments (my husband wasn’t paid for three months). If we want to buy a house in two to three years, will that be sufficient to keep us from having to get a mortgage? How poor does your credit have to be to have to apply for a “bad credit mortgage”?

Answers:
Two or three years from now, a missed payment on a couple cards cannot send you into twenty percent interest rates. I am also assuming those cards before the the missed payment was up to date and you don’t be late on any payment for the next year or two. These can be justified by the fact that your husband didn’t get paid from work. That explanation will send up alarms if you looked for a mortgage now. Missing a couple payment on a few cards after not receiving payments for three months will point out to the lender that you do not have enough savings to handle a bump in the road. They will view this on the mortgage application either way. Most well-known agencies will ask or mandate you have a six month savings buffer. After your situation, they may strongly recommend it and reject your application until you have enough savings. They are just saving their business from you defaulting on the mortgage and foreclosure.

Even if your rating comes in really poor, as long as your front and back ratios appear fine, the bad credit score will just disable you from top lenders and the lower interest rates. You would, on the other hand, qualify for sub-prime companies which may not hold PMI charges, but will charge a few numbers higher. You may still be able to get a piggyback loan in which your mortgage is partially funded by a prime lender and a sub-prime lender. Piggy backs may get rid of PMI but a portion of your sub-prime loan will still come at a larger interest rate.

Your primary problem isn’t the missed payments, your primary problem is your low savings. Save enough for the both of you to live on for 6 months with zero income and then everything above that, use that for an up-front payment. Even if in three years that additional savings doesn’t equal a 20% down payment, you’ll still be able to get a large number and many types of loans if your credit score and ratios are sufficient.

Under Bad Credit Mortgages