Today, many deserving people will only qualify for a bad credit mortgage loan or a high risk loan to purchase or refinance a home because they don’t meet the traditional minimum credit guidelines for low mortgage rates. A low income home loan, loan for people with bad credit or a bad credit mortgage were rare commodities. Agencies and secondary market investors established traditional guidelines for the minimum credit property requirements that home buyers are expected to meet to qualify for a low loan rate and not a bad credit loan.
When a loan meets the industry guidelines as described, it is generally called a conforming loan. When a loan deviates from the conforming guidelines, it is generally known as a non-conforming loan or a high risk loan. This is a loan for people with bad credit or a bad credit mortgage. The more the loan deviates from the standards, the riskier the loan is in the eyes of the lender.
Not long ago, borrowers or properties that did not meet conforming guidelines found it extremely difficult, if not impossible, to obtain any type of mortgage financing. High risk loans were called bad credit loans, bad credit mortgage loans, or loans for people with bad credit and were usually subject to high interest rates and lenders frequently asked for larger down payments. Since lenders felt that high risk loans such as bad credit mortgages were riskier than conforming loans, they required a higher return on their funds.
Recently, this non-traditional way of making mortgage loans has become more attractive and come to include a low income loan and a loan for people with bad credit. By combining the elements of a reasonable down payment and slightly higher rates, some lenders are finding it more attractive to offer high risk loans.
High-risk loan programs generally relax the requirements of conforming loan programs:
Current loan programs that are available include a Six Month LIBOR Adjustable Rate Mortgage, 30 Year Fixed Rate Mortgage, 30 Year Fixed Rate Mortgage which matures in 15 years, and a Six Month LIBOR Adjustable Rate Mortgage where the initial interest rate is fixed for a period of time and the first interest rate adjustment occurs on the 24th or 36th payment date of the loan.
To have one of our lending partners help you evaluate how you might best secure a great rate on a bad credit mortgage or a bad credit loan in spite of any credit issues, simply fill out our 1 Step Mortgage Home Loan Request Form.
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