High risk mortgage loans accounted for 30% of home loans in 2006. Lenders continue to approve these types of loans as home prices continue to climb in many home markets.
Even with poor credit, you can get approved for a non-traditional mortgage. Start by getting your financial paperwork in order. Next, match loan products with your budget needs. And finally, negotiate favorable terms with the lender.
First – Get Your Financial Paperwork In Order
With high risk mortgages, you need to establish that you have the ability to make the loan payments. Lenders look at your assets and your pattern of bill payments.
You can establish a positive payment history by using a credit card. Even with poor credit, using credit is important to lenders. Another way to improve your loan application is to increase your cash savings. That means moving any investments you may have, such as stocks, to a savings account or money market.
And while you are looking at your finances, check your credit report. Make sure that it is as good as it can be. Address any errors or misinformation. Also, think about including a letter in your report to explain any extenuating circumstances for your credit problems, such as job loss or illness.
Next – Pick The Right Loan Product
High risk mortgage loans come in a variety of terms. You can select interest only loans, payment option ARMs, jumbo loans, or balloon payments. Each lending product is designed for a particular financial situation. You need to pick the one that best meets your needs.
Finally – Negotiate Better Terms
After you have decided on the type of loan you want, shop around for the lowest rates and fees. Request loan quotes from lenders online to get speedy results.
Once you find a good deal, talk with the lending officer to get lower rates and fees. Explain your finances, so they see what your credit should be. And donít be afraid to bring up the competing offers you have found.
Not only can you get approved for a high-risk mortgage, but you can also get low rates by searching online for mortgage lenders.