David Wilson asked:


In the world of finance, few words seem as incongruous as “bad credit mortgage,” but in reality, there are many opportunities for a borrower to acquire a mortgage even with a poor credit history.

First and foremost, a bad credit mortgage is usually referred to as a subprime, non-prime, second chance, near-prime, or B-paper lending situation. In fact, subprime lending practices are involved in many types of credit, including credit cards and car loans. The types of individuals who would be considered for a subprime mortgage are those with credit scores of less than 600 or 620. Other individuals to whom a subprime mortgage would be appropriate are those who have filled bankruptcy within the last 7 years, have a history of late payments, or have been subject to foreclosure/repossession/judgment.

Overall a bad credit mortgage is very similar to that of a prime or standard mortgage. They follow similar rate models such as a fixed, adjustable, or interest rate loan. Other models used in the subprime and prime mortgage industries are the hybrid mortgage, which is a combination of a fixed and adjustable rate formats, and pay option loan. A pay option mortgage is one that allows the participant to select the monthly payment type, which can be an interest-only payment, a minimum payment, 30 year complete amortization, or 15 year complete amortization.

The main difference between a prime credit and bad credit mortgage is the rate involved. Due to the higher risk posed to the lender, a special pricing model is used to determine the rate by incorporating such factors as the borrower’s payment history, loan to value ratio (LTV) and credit score. The rates will be higher, and there are usually other fees and conditions that follow the loan. Some examples of these conditions are the balloon payment and prepayment penalty. The balloon payment is where the borrower is required to pay a lump sum after a certain time frame, sometimes as short as five years. A prepayment penalty is a fee assessed against the borrower for an early payoff of the mortgage, such as when the borrower decides to refinance or sell the home. In certain cases, these penalties and payments can be waived by paying higher fees/points up front.

When looking for a bad credit mortgage, be careful of predatory lenders. It is a common misconception that predatory practices and individuals with bad credit go hand-in-hand, but no one should have to settle for an unethical lender. Some common examples of predatory lending practices include superlative or otherwise large fees, persuading borrowers to falsify their income in order to qualify for a larger loan, and loan flipping. Loan flipping is particularly harmful, as the lender encourages the homeowner into refinancing for little or no gain. The lender, on the other hand, benefits from all of the fees, penalties, and higher interest rate.



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Manu Geol asked:


Donegal is a wonderful place to live in and assuming a mortgage seems a good idea. Mortgages, as such, have transformed our lives in a radical manner. Just talk to any adult and you will find that most of them have taken a mortgage (or are planning to get one). So, the mortgage loan monthly payment is a standard/regular outgo from the bank accounts of many people.

There are various types of mortgages, all of which are basically based on just 2 types of mortgage rates i.e. the fixed mortgage rate and the adjustable mortgage rate (and there are various combinations of these). And you can get a mortgage either through a mortgage broker or through a lender. However, there is another way of getting a mortgage i.e. by assuming a mortgage. When you say that you assumed a mortgage in Donegal, you are basically referring to taking over the mortgage that the seller had on his/her Donegal house. So, the obligation of his/her mortgage (on that Donegal house, that you are buying), will be transferred to you. Of course, the consent of the mortgage lender is required but you can surely assume the mortgage of the seller. The mortgage you assume from a seller generally continues with you on either the same mortgage interest rate or a lower mortgage interest rate. Further, the fees (and the hassle) with such a mortgage is much lesser.

Assuming a mortgage is surely a good option, however, you must evaluate it in the light of other mortgage offers that you can get (you can quickly get other mortgage offers through websites Online).



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Manu Geol asked:


Are you thinking about getting a balloon mortgage for your Ephrates home? Balloon mortgages are not a bad option at all. However, just like any type of mortgage, you must have a clear understanding on what a balloon mortgage is.

The meaning of Balloon mortgages is hidden in the word balloon i.e. starting small at the mouth and then suddenly becoming huge. This is what happens with balloon mortgages too i.e. you start with small payments and then finally pay a big amount to pay off your home mortgage loan completely. Balloon mortgages are fixed rate mortgages for a short period (3- 10 years) and the balloon mortgage loan is generally provided by the seller to the buyer. So balloon mortgages are seller assisted mortgages where the buyer has to make very small payments for most of the tenure of loan (which is generally the interest portion only) and payoff the entire loan amount (i.e. the full principal) at the end of the loan term. This is in fact the most difficult thing with balloon mortgages, because besides making your monthly mortgage payments, you will have to channelize your investments and savings in a way that you have enough money when the final big payment arrives. However, this problem can be easily addressed by going for loan refinancing towards the end of the balloon mortgage term.

So, you can count in balloon mortgages too as an option for your Ephrates mortgage. (You can get more tips and articles on balloon mortgages from such sites online and you can even perform your mortgage calculations and get mortgage offers through same sites)



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Manu Geol asked:


Mortgages have become part of our lives. Almost everyone is paying out a portion of their earnings towards mortgages. There are various types of home mortgage loans available which you can opt for. And if you are eligible and have a good credit history, your home mortgage loan will get approved and you would soon be able to move into your Nebraska home.

Among various mortgage options, VA loan too is a popular option. If you are a veteran/ service person, you can get a VA loan too. VA loans are handled through private mortgage lenders. VA loans are not loans in actual i.e. VA (Veterans Administration) doesn’t disburse any loans. VA loans are a type of mortgage insurance which provides a guarantee to the mortgage lender. So VA loans facilitate the mortgage approval process for the mortgage borrower by assuring the mortgage lenders through a guarantee. However, you generally don’t have to pay mortgage insurance premiums for VA loans. VA loans are basically government’s guarantee and there is generally a limit on the amount that VA loans guarantee to the mortgage lenders. With a VA loan, you would need to make no (or a very small) down payment for your Nebraska mortgage. With VA backing, you can even improve your chances of getting good mortgage offers (you can get multiple mortgage offers very easily and very quickly through a websites online). So VA loans are surely a good option if you are a veteran/ service person. You should surely explore this wonderful option.



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lotrav asked:


I was in a bad accident a few years ago and couldnt afford any of my bills. I have charge offs, late payments etc. My husband has excellent credit with an established employment history. I am wondering if we could use our combined income on the mortgage application and just use his credit for the interest rate, or if anyone has any other suggestions?

Thanks!

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