Bad Credit and No Money Down - Don't Buy
Reader Question: With bad credit and no money down who should I contact first?
I'm not sure what you mean by "who should I contact first." But if you are asking how to move forward with getting a mortgage loan and buying a home, my advice is not to do it. That's probably not what you want to hear, but it could be the best advice you get all week.
If I were you, I would focus on doing two things simultaneously -- improving my credit score and saving money toward a down payment. Let's talk about each one in turn:
If you've been watching the news lately, you'll know that our economy is in serious trouble right now ... in worse condition than it's been in for decades. Much of this is the direct or indirect result of the subprime mortgage collapse that in turn wreaked havoc on our housing market.
The federal government has (finally) stepped up its regulation of lending institutions in this country. Too little too late, in my opinion, but that's another article entirely. So mortgage lenders today require borrowers to have better credit scores in order to (A) qualify for a loan and (B) get a decent interest rate on the loan. In other words, subprime loans to borrowers with bad credit are practically extinct these days.
If you truly have a "bad" score by a lender's definition, you will have trouble qualifying for a mortgage loan. If you do qualify, I can practically guarantee that you'll be paying a ton of interest on the loan. This could lead to default and possibly foreclosure problems down the road, which is happening to thousands of Americans as we speak.
This is secondary to the credit score issues covered above, but it's still an important point. If you can put money aside for a down payment of 20 percent, your monthly mortgage payment will be much smaller. You'll also have an easier time qualifying for a loan, because you won't have to borrow as much for the principal amount -- you'll be paying some of the home price up front, in the form of a down payment on the home.
Don't be discouraged by all of this. Just be patient. It's probably not the advice you wanted, but it's the advice you need. Bad advice dished out by greedy mortgage lenders is partly what led us to the economical mess we are in now!
Work on boosting your credit score and start saving money. If you can reduce your debt as well (starting with those high-interest credit card balances), that will also help your cause.
Good luck!
I'm not sure what you mean by "who should I contact first." But if you are asking how to move forward with getting a mortgage loan and buying a home, my advice is not to do it. That's probably not what you want to hear, but it could be the best advice you get all week.
If I were you, I would focus on doing two things simultaneously -- improving my credit score and saving money toward a down payment. Let's talk about each one in turn:
Improving Your Credit Score
If you've been watching the news lately, you'll know that our economy is in serious trouble right now ... in worse condition than it's been in for decades. Much of this is the direct or indirect result of the subprime mortgage collapse that in turn wreaked havoc on our housing market.
The federal government has (finally) stepped up its regulation of lending institutions in this country. Too little too late, in my opinion, but that's another article entirely. So mortgage lenders today require borrowers to have better credit scores in order to (A) qualify for a loan and (B) get a decent interest rate on the loan. In other words, subprime loans to borrowers with bad credit are practically extinct these days.
If you truly have a "bad" score by a lender's definition, you will have trouble qualifying for a mortgage loan. If you do qualify, I can practically guarantee that you'll be paying a ton of interest on the loan. This could lead to default and possibly foreclosure problems down the road, which is happening to thousands of Americans as we speak.
Saving Up for a Down Payment
This is secondary to the credit score issues covered above, but it's still an important point. If you can put money aside for a down payment of 20 percent, your monthly mortgage payment will be much smaller. You'll also have an easier time qualifying for a loan, because you won't have to borrow as much for the principal amount -- you'll be paying some of the home price up front, in the form of a down payment on the home.
Don't be discouraged by all of this. Just be patient. It's probably not the advice you wanted, but it's the advice you need. Bad advice dished out by greedy mortgage lenders is partly what led us to the economical mess we are in now!
Work on boosting your credit score and start saving money. If you can reduce your debt as well (starting with those high-interest credit card balances), that will also help your cause.
Good luck!
Labels: Bad Credit Mortgage
posted by Brandon at
11:15 AM
