Bad Credit Mortgage

Bad credit mortgage - the way things used to be

Bad credit mortgage has acquired new meaning since the latest real estate boom swept the nation. Before, bad credit mortgage was defined quite straight forward. If your middle FICO credit score fell below 680, it was bad enough. To obtain a mortgage you would have to go to a sub prime lender and pay rather high fees for quite high interest rate.

Today, bad credit mortgage has different meaning. FICO requirements have been relaxed. Alternative A or A- mortgage loans cover credit score range from 679 all the way to 620. Sub prime lenders market share has been growing steadily for the last 5 years or so. Conventional lenders acquired several sub prime lenders and thus, there is no solid border between prime and sub prime mortgage lending anymore.

Bad credit mortgage - the way things stand now

Bad credit mortgage is defined these days not just by your credit score,  but by which factors on your credit report make the credit score bad. This combination of factors comprises credit rating.

You can have a credit score of 680+, but if your credit history is too recent or credit report doesn't show enough trade lines with sufficiently high balances, you have bad credit from mortgage lender perspective.

I saw many cases where folks with credit scores around 650+ and a very established credit were denied mortgage by many prime or conventional lenders and were forced to apply for a home mortgage through very hardcore sub prime lenders. The reason was that their credit reports contained various judgments, liens, late mortgage payments, etc. So it is often imperative to check your credit rating before applying.

Bad credit mortgage with bad mortgage

Bad credit mortgage often is the result of predatory lending, when a borrower with good credit is sold a bad mortgage.  Bad mortgage is simply the one that borrower can't eventually afford. Unfortunately, these are the mortgages where unscrupulous and dishonest loan officers make the most money. Bad mortgage can come with high interest rates, high fees, mortgage insurance, prepayment penalty and so on in cases where none of those is warranted. Eventually, borrower is getting late on the payments and his credit becomes bad.

See more articles on bad credit mortgage:

Bad credit mortgage refinance
Bad credit home equity loan
Private mortgage insurance

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