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Home Loan in 3 Easy Steps
Bad Credit Mortgage Loans
Bad credit mortgage loans can help consumers to purchase a house, but on the other hand they might end with a financial disaster. As is the case with all types of high-risk lending, clients are charged interest with much higher rate. This adds up to monthly mortgage payments and could make the loan expanse even thousands of dollars bigger.
The sum of interest assessed on bad credit mortgage loans are usually based on clients’’ FICO scores and their credit history. Consumers with FICO scores lower than 550 usually pay higher interest rates than those with FICO scores 620. Even if both scores go into the bad credit category still score of 620 is supposed to be a lesser financial risk.
While bad credit mortgages loan are more expansive than conventional home loans, they constitute a financial option that can help debtors to purchase a home and rebuild their credit at the same time. If those who take loans are able to present a strong track record of payments done in full and in due time for a year or two it should be enough for them to refinance into a conventional home loan.
Home Path Mortgage is such an option for buying a house with poor credit. This special financing program is obtainable to clients who buy Fannie Mae bank owned foreclosure houses. Not only they sell distressed properties lower than current market value, it also allows clients to get help with down payment and provides a 3 % low down payment requirement.
When consumers get their financing through conventional loan providers they usually need to have a down payment 10- 20-percent. The clients who purchase home with Fannie Mae bank will also be able to apply to take part in Neighborhood Stabilization Program (NSP) grants. If they receive these grants, they can use them for the HomePath down payment conditions, or to conduct some property improvements.