You’re planning to refinance or purchase a house, but are bit hesitant as your credit took a nose dive due to unpaid bills, or long period of unemployment. You’ve recently checked with the bank, made few calls, but can’t get your foot in the door. So what are your options? There are lenders for bad credit mortgages in Orillia that offer such loans in situations where most banks or financial institutions would just say “no” to your application.
Know What Happened and Why
Before you go ahead shopping for a mortgage, it’s good co consider the big picture. What caused your financial issues? Did you file for some bankruptcy? Did you lose your house in foreclosure? Have you checked your credit score and have you taken steps to raise it? Howe much credit you can actually afford? In such situations, it may take a long time to rebuild your bruised credit to a point where you can easily qualify for a mortgage. Though some lenders may agree to work with your past financial hardships but they also need to verify that you’ve sufficiently recovered from hardships and can now afford to make mortgage payments.
So the best way to go is to prepare a document to explain all that caused your financial issues. Whether it was a business failure, long-term unemployment, losing your health insurance or catastrophic medical bills, it is very important to provide specific information rather than saying only that you’ve had too many bills to handle.
Verify There Are No Outstanding Errors On Your File
You may have issues with your credit cards that you may not be aware of. These days, identity thefts are common in Canada and consumer debts are often sold to shady industry. The first way to go is to seek your report from Equifax or TransUnion. You can get that for free. Many sites may ask for a fee to provide you with a credit report. Check if there are errors on your report. You can always dispute them.
Having a low credit score is not a big issue as you can improve it quickly. The easiest way is to pay your bills on time. Some mortgage lenders may check payment trends on mortgage or rent, so be careful. Also, maintain a low balance on credit cards and try to lower it by at least 75 points. Never open credit cards that are not required. Some accounts still stick when they are closed. On the other hand, new accounts may lower the account age, which may lower your credit score.
Bad Credit Will Result In Extra Costs
Bad credit mortgages in Orillia may cost you more than traditional bank mortgages. Most lenders will consider you as a higher risk if you have a low credit score. For this reason, they may charge you more to compensate additional risk in financing you. So be prepared to pay higher mortgage rates, lender fees and discount points.
How To Qualify for a Mortgage if I Don’t Have Good Credit?
You have an option for secured loans that have been designed for individuals with low credit score. Lenders usually look for stable monthly income. They want to make sure you earn enough to make your ends meet and also pay your instalments on time. Lenders may ask for higher home equity because they’re dealing with a risky customer.
If you have a low credit score, be prepared to make 12-18 percent down. The higher the down payment amount, the better your chances to get approved for a mortgage loan. Some bad credit mortgage lenders may ask for a reliable co-signer with good payment history.
Bad Credit Mortgage – Now or Later?
After checking credit scores and requesting mortgage quotes, you may wonder if getting a bad credit mortgage is worth that extra expense. Sometimes, it may be worthwhile to wait until your score improves. If you’ve lost your house to foreclosure or have recently filed for bankruptcy, you can wait for two to three years after bankruptcy or foreclosure. This waiting period can be used to pay off debt and save for down payment and some emergency fund.
Bad Credit Mortgages: Shop Until You Get The Best Deal
You can get the best deal by shopping for bad credit mortgage. Contact us to request a few mortgage quotes and compare them. With careful shopping, you can save on loan costs.