What if you have an abysmal credit report but you're still desperate to buy a house? Will you need to grovel and kiss the shoes of your potential mortgage provider? Well no, you just need to give them a much larger deposit.
Most mortgage providers will make the investment in you provided you give them enough security. Not only that you can also expect to pay higher rates of interest than people with better credit scores. The lender has to compensate for the risk somehow.
And if that wasn't bad enough you will also most likely be locked in to that product for a certain amount of time. Usually 2 to 3 years. This is called a prepayment penalty or an early redemption penalty in some cases. Interestingly it may not only be the lender who sees an opportunity to squeeze some more money out of you! Read on...
Often the loan officer, sometimes known as the mortgage broker, will decide to cash in on those with bad credit by increasing the rate by another couple of percent. They make the calculation that those with bad credit have very few options when it comes to home loans and they are hoping that they can get away with it. It's a hard pill to swallow but if you really want a loan there's no point crying over spilt milk!
So if you're looking for a home loan and you have bad credit then you can expect to be ripped off more than your squeaky clean counterparts. Maybe ripped off is a strong term but that's pretty much what it boils down to. If you really want to buy that house then you have to do whatever it takes!
source ezine