| In today's economy, many people have a damaged | | | | taking by lending you money with a poor credit score |
| credit score after having experienced setbacks during | | | | but it should still be a competitive rate. Consider using |
| the recently, and arguably still current financial crisis. | | | | an online company or website to get multiple quotes |
| Lost jobs, foreclosed homes, poor performing 401K's | | | | from several reputable lenders to save time and |
| and the list goes on. | | | | money. |
| On the other hand, because of the poor economy, in | | | | 4. Is there a pre-payment penalty? If so, what are the |
| many markets there are great deals to be found in | | | | terms? Though rare in today's market, some loans |
| terms of new homes and with a low interest rate. | | | | include prepayment penalties. It is very important that |
| Even if you have a poor credit score, it is still possible | | | | you avoid this penalty because as your credit score |
| get a approved for a new mortgage or even a | | | | improves over time from prompt and consistent |
| mortgage refinance. | | | | payments, you will want to refinance your loan to |
| Consider applying online with a reputable broker or | | | | secure a lower interest rate. |
| lender simply to find out what your options are. Many | | | | 5. Ask yourself, "Can I afford this monthly payment |
| companies have specific programs for people with | | | | long-term?" This is a key question many people fail to |
| poor credit. You can read about some great, | | | | ask themselves and is the reason why many people |
| hand-picked companies on our website. Completing a | | | | have lost their homes during the current recession. Do |
| simple online application can help save you a lot of time | | | | not make the mistake of taking on a mortgage |
| by getting an answer from multiple lenders right away. | | | | obligation you can barely afford; it is much better to be |
| If you find a lender who will work with you, these are a | | | | conservative, even if it means living a little smaller. Two, |
| few key questions to ask: | | | | three years from now, you do not know if you will lose |
| | | | your job, face an unfortunate and unexpected medical |
| 1. Are there any extra fees you are paying due to | | | | expense or any number of financial issues. Also be |
| your credit score? Some lenders will try to take | | | | sure to keep an emergency savings fund available |
| advantage of you by charging extra fees but this is | | | | with six to 12 months of living expenses in the event |
| unnecessary. Ask for a Good Faith Estimate, which is | | | | an unplanned financial emergency is encountered. |
| a formal quote and review every line to ensure you | | | | 6. Finally, are you comfortable with the lender and their |
| are comfortable with all of the fees. | | | | terms? Do not feel pressured into any financial |
| 2. Are you paying down your interest rate by paying | | | | situation you are not 100% comfortable with. Many |
| additional costs? Some lenders will offer you a lower | | | | lenders will try to apply pressure to make a decision to |
| rate by charging you more up front in the form of | | | | lock in a "low" interest rate. Keep in mind that rates |
| fees. Sometimes this is referred to as buying points. | | | | fluctuate daily and while securing the lowest possible |
| This isn't necessarily a bad thing but you want to make | | | | rate is important, ensuring you are comfortable with |
| sure you know how your interest rate is being | | | | terms and the monthly payment is the most important. |
| calculated. | | | | Only move forward when you are ready. |
| 3. What interest rate are you being offered relative to | | | | It really helps to work with a company that offers a |
| current market rates? You can review current market | | | | specific bad credit mortgage program. Seek out a |
| rates by going to With a poor credit score, it isn't | | | | referral that you can trust to help save time and |
| uncommon to be charged a higher interest rate to | | | | money. |
| account for the additional "credit risk" your lender is | | | | |