View Full Version : How hard is it to get a home mortgage?
04-13-2003, 12:50 AM
How hard is it to get a home mortgage in this day and age. Regardless of credit and down payment -- can you get one? I know that the worse your credit, the bigger the interest payment.
But -- if you are willing to pay high interest rates, can you get a mortgage?
I say you can, at a high price , my friend says you can't with bad credit.
What is the answer?
04-13-2003, 01:22 AM
I have many friends and realatives in the real estate industry and the general knowlege is that as long as you have the income, you can get a mortgage. It's just that if you have bad credit, it may be prohibitively expensive to get the mortgage. My aunt (a VP at a title company) once closed a house where the buyer was paying 22% in mortagage interest, when the going rate was closer to 8%.
Now if your credit is downright awful, never paid a bill and what-not, you'll probably be denied no matter how much you can pay.
04-13-2003, 01:41 AM
Really does depend on how bad is bad credit.
Bankruptcy alone is not a reason to deny a mortgage, but a current history of non-payment of rent, credit cards, utilities, etc. will not bode well.
Also depends on the market...if a house isn't selling, or a housing development is not in the best neighborhood, they are more willing to take a risk. Yes, you will have high morgage interest, but with the low interest now, that high interest might not be all that bad in the grand scheme of things. Tax savings alone with home ownership are enormous.
There are lots of programs out there for people with less than perfect credit. Try going on Lendingtree.com or the ilk...be HONEST and you might be surprised that a bank or two is willing to take the risk.
Another option, if you are serious about buying a home, is a lease-to-own from the seller. It is a bit risky, but basically you are paying a bit more in rent so that you are "saving" for a downpayment. After a year or so, you theoretically are in a position to take over the mortgage. But be sure to read the fine print before you enter into such a deal! There have been some horror stories about that.
There is another program called the Nehimia (sp?)...I am not totally versed in it, but essentially it is a program that will allow you to move in with as little as1 percent down.
With the high rents for apartments, and low interest rates to buy a home today, anybody who can should really try to buy a home. The benefits are worth the effort! Paying rent is money out the window.
04-13-2003, 08:26 AM
I'm in commercial real estate but I'm familiar with the scenarios surrounding bad credit applicants for residential RE.
There are levels to everything. If you can get a loan a few points above market because of your credit with the idea of refinancing in a year or two that's one thing, but getting a very high interest (ie 14 %+) loan for high risk applicants because of your bad credit is generally a bad idea from a longer term financial perspective. Chasing a 15-20% interest payment on a house is a bad deal generally and is a good prescription for financial ruin unless you can absolutely, positively make the usurious interest payments.
You are better off living as moderately a possible for a few years and saving up a healthy down payment (say 15-20%) . This will allow you to mitigate the risk to the lender with a big down payment and to get a close to market rate. If you must buy a house no matter what the rate please stick with the more reputable mortgage lending institutions. There are many quick loan organizations that exist to live off desperate people and charge them insane loan placement and interest rates. Many larger reputable lenders have 2nd and 3rd tier credit options they don't advertise and these are less punishing than the "lender of last resort" deals.
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