Which mortgage should I get if I have bad credit?
Having bad credit will most likely mean that you are not going to be able to get the best interest rate on your mortgage. It doesn’t mean however that you can’t or shouldn’t get a mortgage. Knowing which mortgage to get however can be difficult without the help of a professional mortgage broker.
If your credit is not good enough to get a mortgage from a traditional lender such as a bank (also known as an A lender), your options will generally be to go to an alternative lender (or B lender), a private lender, or you could enter into a rent to own agreement.
While the exact mortgage that you should choose will vary depending on your situation, here are a few factors that you should consider when choosing a bad credit lender.
- Is the lender reputable?
Just like in any industry, there are lenders in the mortgage industry that are not exactly above board. Unfortunately, if you don’t know the industry well, it can be hard to determine which lenders are reputable. For this reason, it is recommended that you always work with a professional mortgage broker when applying for a bad credit mortgage.
- What kind of interest rates is the lender offering?
As mentioned before, with a bad credit mortgage you will not get the same rates that you will if you were able to borrow from an A lender (with the possible exception of getting a private mortgage from a friend or family member). Nevertheless, different lenders have different rates, and you want to get the best rate that you can.
- Should you get a private mortgage from a friend or family member?
If a friend or family member offers to give you a private mortgage, you need to consider how this is going to affect your relationship with them before accepting their offer. On one hand, you might be able to get a better rate, but what will the true relational cost be if you become unable to make the payments? This is a question only you can answer.
- Will you be able to make the payments?
Getting a mortgage is a big commitment, and if you already have poor credit, you need to be able to make sure that you will be able to make the payments before you enter into it. Your mortgage is an opportunity to rebuild your credit or to destroy it even more. Develop a plan to repair your credit before entering into any mortgage.
If you have bad credit and need help in choosing the right mortgage for you, we can help. Contact Matrix Mortgage Global today to schedule and appointment.