| Mortgage loans for bad credit can help borrowers buy | | | | requirement of 3-percent. |
| a house, but they can also lead to financial disaster. As | | | | When borrowers finance through conventional lenders |
| with any type of high-risk lending, borrowers are | | | | they typically must provide a down payment of 10- to |
| charged a higher rate of interest. This inflates monthly | | | | 20-percent. Home buyers who purchase Fannie Mae |
| mortgage payments and can add thousands of dollars | | | | bank owned homes in areas hit hard by foreclosure |
| to the cost of the loan. | | | | can apply for Neighborhood Stabilization Program |
| The amount of interest assessed on mortgage loans | | | | (NSP) grants. If awarded, NSP grants can be used |
| for bad credit is typically based on borrowers' FICO | | | | toward the HomePath down payment requirement, or |
| scores and credit history. Borrowers with FICO scores | | | | to make property improvements. |
| below 550 generally pay higher rates of interest than | | | | Individuals who have lost their home to foreclosure or |
| those with FICO scores of 620. While both scores fall | | | | filed for personal bankruptcy within the previous two |
| into the bad credit category a FICO score of 620 is | | | | years face multiple challenges when applying for a |
| perceived to present a lesser financial risk. | | | | mortgage loan. One option to consider is hard money |
| While bad credit mortgages cost more than | | | | loans offered through investment groups or private |
| conventional home loans, this finance option can help | | | | investors. |
| debtors buy a home while establishing or rebuilding | | | | Hard money loans can be quite costly and should be |
| credit. If borrowers can develop a strong track record | | | | used as temporary financing. Real estate investors |
| of submitting payments on time and in full they can | | | | often require down payments of up to 50-percent and |
| refinance into a conventional home loan within a year | | | | assess interest rates between 18- and 25-percent. |
| or two. | | | | Borrowers who enter into hard money lender real |
| One option for buying a house with poor credit is | | | | estate loans should strive to refinance mortgages |
| Home Path Mortgage. Offered through mortgage | | | | within a year or two. |
| financier, Fannie Mae, this special financing program is | | | | Borrowers who hold a mortgage note and need to |
| available to buyers who purchase Fannie Mae bank | | | | refinance should investigate Obama's Making Home |
| owned foreclosure houses. | | | | Affordable program. This government sponsored |
| HomePath financing options include provisions for | | | | program is available to debtors with bad credit. |
| borrowers with poor credit. In addition to selling | | | | However, eligibility requirements state borrowers must |
| distressed properties below market value, Home Path | | | | be current on their home loan and have not been |
| Mortgage allows borrowers to obtain down payment | | | | delinquent with payments by more than 30 days within |
| assistance and offer a low down payment | | | | the previous twelve months. |