Bad Credit Mortgage

This economy is in bad shape, and along with the economy most people's credit scores have gone down the tubes. If you have bad or less than perfect credit are there options when it comes to finding a bad credit mortgage? Absolutely YES! This page is designed to show you what the options are if you are in need of a bad credit mortgage loan and how to obtain one.

To get even more information and specifics on loan programs make sure to visit bad credit mortgages.

 If you have done any looking around for mortgage loans you have probably realized that there are many different options of loans out there.  Some of these loan options include Conventional, FHA, VA, USDA, and Reverse mortgage loans.  Out of all these options which ones work with bad credit history and scores?

FHA is the best loan option hands down!  If you have bad credit and still want to buy a home, you have an excellent chance of doing so if you choose an FHA product.  FHA stands for (Federal Housing Administration) and insures up to 100% of the original mortgage loan amount that a lender borrows to you.  Because the government will insure up to 100%, many lenders will take the risk and loan to people with bad credit.  What are the guidelines to fit into an FHA program if you have bad credit?  Let's go over these.

• Recently FHA announced that you must have a mid credit score of 620.  This means out of the 3 credit scores you have, the middle score must be a 620 or above to qualify to apply for an FHA loan.  The majority of people with less than perfect credit score usually will have a mid score of 620.
• No matter how bad your actual credit history is, you cannot have any lates or collections that have happened within the last 12 months.  If things have happened prior to 12 months they will still be able to approve you for a loan.  The only way to counter this guideline is by having a high credit score.  Sometimes if you have had a late or collection in the last year but have a credit score of 720, the system will still allow an approval. 
• All collections and liens must be paid before you can be approved for an FHA loan.  FHA does not allow for judgements, liens, or collections to be paid out of the loan proceeds, they must be paid before you close on your loan.  The reason for this is that when a lender gives you a mortgage loan, they want to be in 1st lien position.  This means if you default on your house, they will be the first ones to be paid if it's sold or foreclosed on.  If you have tax liens or judgements it puts these accounts in first lien position, which means that the mortgage lender will not be.  Because of this they won't even approve you for the loan until these accounts are taken care of so they can be fully protected by the new asset.

First of all get your credit pulled so you can know where you stand. Too many people have their credit pulled for the first time by lenders and then are in shell shock when they are told what is on their credit report. Avid this by knowing exactly whats going on. Once you have the report, learn how to read it by visiting repair the score which offers free credit repair tips.

Once you know what is going on with your credit and where you stand, call a mortgage loan officer or go to your local bank with your last 2 pay stubs, last 2 years of w2's, and a copy of your drivers license and social security card. With this information a mortgage loan officer will be able to do a pre-qualification and let you know very quickly if your income and debt ratio's fit the FHA guidelines. Remember that getting pre-qualified is FREE at most banks, so don't pay money just to have someone look over your information.

Once you have been pre-qualified the loan originator will make a list of additional things they will need but at that point you are pretty much going to get an FHA mortgage loan. This process is very easy and takes only a matter of time to make sure you approve.

What happens if you don't approve for the loan? Don't give up! Too many people just say to themselves, "I'll never get a house" and just leave it at that. There are things you can do to fix your credit within 60-90 days!