Yes, it’s true that people with bad credit who were still able to secure mortgage loans were a large part of the collapse of the U.S. housing market and subsequent economic slowdown.
However, it’s also true that bad credit can sometimes happen to good people, and some of those people still want to move into homes and build equity as they repair their credit scores.
For such people, mortgage loans still exist, although it is harder to get one than it was several years ago (a fact for which we should be grateful..).
About Bad Credit Mortgages
Many of the lenders that gave bad credit mortgages back in the middle years of the first decade of the 21st Century have gone out of business or stopped lending. There are a few giants, however, that will still make mortgages for bad credit, as well as numerous other less well-known lenders that swing such deals.
Among the large reputable banks still in the mortgage loan business for people with low credit scores are: Bank of America, GMAC Mortgage and First Horizon Home Loan Corp.
If you are able to find a lender to dance with as you negotiate a mortgage loan, don’t forget that you can’t expect to match the super deal that your neighbor with good credit got. Because of your low credit score, you will probably have to pay a higher interest rate, higher processing fees and possible additional service fees.
One great way to improve your chances of obtaining mortgage loan, is to find a close friend or relative that has good credit and is willing to cosign on the loan with you. A quality cosigner can not only increase the probability of getting one of the mortgage loans that is on the market, s/he might even be able to secure better terms on that loan for you.
FHA Mortgage Loans
Whatever path you take to get a mortgage loan as you wrestle with bad credit, be sure to apply only to FHA-approved lenders that offer FHA-approved loans. Such lenders are able to service even high-risk clients because they have been approved by the federal government for such deals.
FHA-approved mortgage loans for bad credit do not have to follow the same strict underwriting guidelines that conventional mortgage lenders follow, and they often require far smaller down payments.