Adverse Credit Mortgages

Does a bad credit rating mean that you will never be able to
get a mortgage? Many people are rejected for mortgages
because of bad marks on their credit rating. It does not take
much to degrade your credit rating: often a bad credit rating
can stem from a simple matter of an unpaid or late utility bill,
a forgotten debt to a book club, or a missed credit card payment.

You may also earn a bad credit rating as the result of identity theft,
which is a growing problem. A bad credit rating can come from a small
missed payment or from something major, but regardless of the

severity of the problem, adverse credit can make it extremely difficult

for you to get a mortgage from a mainstream lender.

Many mortgage brokers will be able to help get you an adverse credit
mortgage. Mortgage brokers have added negotiation power with major
lenders, and so they may be able to get you a mortgage from a bank
that would otherwise reject you. This is because mortgage brokers
bring thousands of customers to banks each year, and so they are
able to exert some influence on your behalf. An adverse credit
mortgage obtained through this route may have a slightly
higher interest rate than the banks other mortgage products,
but will still be competitive.

The other avenue for adverse credit mortgages is the smaller lending
companies. These lenders will command high interest rates to give
you a mortgage. Unlike regular mortgages, there is not much
competition for adverse credit mortgages, so lenders can charge
higher interest rates as a rule. However, smaller mortgage companies
may charge up to double the going interest rate for your mortgage,
simply because there are no other lenders willing to take the risk on
a borrower with adverse credit. Ironically, these smaller lenders are
probably borrowing money from the larger mainstream banks just
so they can lend it to you! Okay, so what can you do if you have a
poor credit history and want to get a mortgage? The first step is to
check into your credit history to make sure there is nothing you can
do to fix it. For example, if you have been the victim of identity theft,
your credit rating may be cleansed just with a few phone calls. Next,
research the mortgage market and visit as many banks as possible to
see if any of them are willing to take a risk.

You should also try to establish a rapport with each personal banker.
Be as honest as you can about what caused your bad credit rating.
Even though you cannot hide your credit history, you may find a sympathetic
person who is willing to “pull some strings” to help you out. Finally,
once you are granted a mortgage, be sure to make every payment on time.
Then when it is time comes to refinance either at the end of your
mortgage term or before, you may be able to negotiate a more
advantageous mortgage.