Mortgage Considerations for People with Bad Credit
A mortgage is the single biggest financial undertaking most people will ever experience. If you are a consumer with bad credit, there are other considerations that need to be given due attention, such as affordability, credit score and other existing debts. Accordingly, the decision to seek a mortgage with bad credit should be made carefully with all of the varying factors taken into account and weighed in the balance.
There are some aspects that should always be born in mind by all prospective mortgagees; with bad credit or regular credit. Those are:
- What is your comfortable price range for the purchase price of your new home?
- How much can you afford to realistically pay each month for the mortgage?
- Do you have a firm hold on your finances and debts to be able to undertake additional debt in the form of a mortgage?
- Is your employment stable?
Seek advice from a bad credit mortgage adviser and gain their insight in order to achieve more clarity on your spending habits and projected income. Remember that a mortgage can last 25 years or more, so you need to be longsighted in your outlook.
Be objective and realistic
Although it is appealing to own a property rather than rent, there is no point buying a home which is unaffordable and makes you miss monthly payments only to go into foreclosure and lose it. Regardless of how much you desire to own a home, you must be objective and cast a very critical eye on your likely financial situation for the next 5 – 10 years. What can you do to improve your credit rating if you are not currently a good candidate for a bad credit mortgage? Be proactive and look for solutions.
Your job and income are two of the most fundamental points to consider regarding a bad credit mortgage. The “spend now, think later” mentality help by many will not help you when thinking about a mortgage, as it is a commitment for the future and long term. You may be in a good job now with a good salary, but ask yourself how stable this is.
The economic downturn and its effect on mortgages
In 2007, many Americans were thrown for a loop when the global financial crisis job millions their jobs and millions their homes. The result was a brand new demographic of consumer with newly bad credit ratings that now struggle to re-climb the property ladder. Always conservatively estimate future earnings and job stability so that you take on a measured and reasonable risk, rather than a mortgage that cuts your salary down to the wire. If you are new in your position at work, you could be vulnerable to job cuts in the near future. If this is a case, it might be better to wait to apply for your bad credit mortgage when you have a more stable position.
High over all interest rates, a “seller’s market” and a general lull in the property world can all drive house and mortgage prices sky high. You need to be aware of these risk factors and how they all interplay in order to make a good judgment about whether or not now is a good time for you to apply for a bad credit mortgage.
Ready to help you
We can help introduce you to leading bad credit lenders that can help you figure out your options without any pressure to accept. Compare what is available, weigh all of the factors and make the right decision for your financial stability.