subject: Dont Become A Victim Of Bad Credit Mortgage Rates [print this page] Bad credit mortgage rates can discourage any person from taking a shot at that dream house of yours. When you are financially troubled but you want to start living in your dream house (which is definitely better than renting a house that will never be yours), try getting a bad credit mortgage. If you've done your research and you've carefully considered your circumstances, getting one is just about the soundest financial decision that you've ever made.
The Federal Trade Commission, Fair Isaac, (the inventor of FICO credit scores) and many other financial experts recommend that before you apply for any home loan, before you even go shopping for a house, check your credit report. In response to a recently enacted law, the three major credit bureaus (Experian, Equifax and TransUnion) have created a website where consumers can view and print their credit reports at no charge.
The difference between a bad credit mortgage rates and a good credit mortgage rates can amount to hundreds of dollars per month and thousands of dollars per year. Consumers with bad credit often jump at any opportunity, but do not jump too quickly. Bad credit mortgage rates will carry higher fees and interest rates.
Thus, in order to get the best interest rates, work on repairing your credit, before you look for a home. If you do not understand how to do this yourself, hire a law firm that specializes in bad credit repair. While they will charge a fee, you will save money in the long run. Bad credit mortgage rates may seem like the answer, but it can be an expensive choice.
One key factor in bad credit mortgages rates is the down payment you provide or the amount of equity you have in your home. This is referred to as the LTV or Loan to Value ratio- how much your home is worth compared to the amount financed. The lower the ratio (loan amount), the lower your interest rate, fees and monthly payment will be. The higher the loan amount, the higher your interest rate, fees and monthly payment will be. This is because you are considered a risk, so a large loan will cost you more than the average consumer.
PMI (Private Mortgage Insurance) is another factor in a bad credit mortgage rates, especially for those who have a higher LTV (as explained above). This insurance differs from your hazard insurance, as that's bought from an insurance agent to protect your assets in case of fire, break in, etc. PMI protects the investors in your home in case you default on your loan payments and the house is sold at auction. PMI will cover any gap between what the home resold for and your mortgage balance, therefore protecting the investors.
