When you apply for any type of financial product, in this case a mortgage, you will have your credit rating checked.Credit rating is a way for the lender to see how reliable you have been in the past with financial products. They need to make sure you are worth the risk of lending you the money.
Lending agencies generally focus on three areas:
- Credit Reputation (your credit score and history)
- Collateral (your loan amount relative to the home value)
- Capacity to Pay (your income, debt, cash reserves)
Many mortgage companies are reluctant to finance people with bad credit or no money to put down. A bad credit mortgage lender helps people who have bad credit score, low income, etc.
A bad credit mortgage lender helps you get your loan approved much faster than programs offered by credit unions and banks. But you have to pay the price to get a bad credit loan. The loan you get will carry a higher rate of interest and will have higher closing fees.
It is advisable to check the rates with a few more bad credit lenders and compare. Even though you have to pay a higher rate, see that the one you settle at is reasonable and the most favorable. At present interest rates are low so try and get the best deal.
