Bad Credit Mortgage - NY Mortgage

Bad Credit home loans are designed for loan applicants with past credit blemishes. While
most banks do not cater to this type of home buyers, Bad Credit Mortgages are widely offered
by "sub-prime" or "non-prime" banks.

What is in a credit report? When evaluating a credit report, there are several areas a lender
scrutinizes. The most important aspect on a credit report would be credit scores. Credit
scores are numerical values assigned to each individual base on how he manages credit.
Most common factors affecting scores are payment punctuality, outstanding balance over
available credit, history of foreclosure, bankruptcy, collections, charge-offs, and recent
activities. There are three major credit bureaus keeping records on the average credit
consumers, so most of us have three credit scores. Because the items reported to the credit
bureaus are not synchronized, the three credit scores are usually not identical. Credit scores
can range from less than 400 to over 800.

What is considered bad credit? As far as most banks are concerned, credit scores below 620
are considered bad credit. In addition, most lenders do not lend to applicants, regardless
their credit scores, exceeding certain number of negative items in their credit profiles, such as
the number of late payments and the number of days late, time elapse since bankruptcy
discharged, the number and amount of collections and charge-offs, etc.

What are Bad Credit Mortgages? Many American homeowners with blemished credits are
surprised to find how common their situations are. In fact, the need for home loan products
by home buyers with poor credit histories has created an entire industry in itself. Many
"sub-prime" lenders have Bad Credit Mortgage programs that accommodate loan
applicants with credit scores as low as 525, with up to 120 days late payments, bad debt
charge-offs, or recently out of bankruptcy.

Bad Credit Mortgages are available in several documentation type, Full Doc, Bank
Statement Doc, or Stated Income. Depending on documentation type and credit profiles, loan
applicants can borrow up to 95% of the property value. The key to getting a Bad Credit
Home Loan is to have compensating factors, such as strong asset base, provable income,
low Debt To Income ratio, and low Loan To Value ratio. A loan applicant with a bad credit
history and has little to no asset, or cannot prove his income, or has much debt, or needs to
borrow over 80% of the home value is considered to have layered risks, and would like not
qualify for Bad Credit Loans.

Because Bad Credit Mortgages have much higher interest rates than Conforming
mortgages, applicants should be realistic in their expectations in terms of interest rates they
qualify for. Home buyers with bad credit histories should also expect to repair their credit
profiles and refinance within the next two years to a low interest rate Conforming mortgage.

Neighborhood banks are often not a good source for Bad Credit Home Loans. These
commercial retail banks usually offer only Conforming loans that are Fannie Mae eligible. As
"sub-prime" or "nonprime" bankers are never household names, mortgage brokers are often
the place to go for Bad Credit Mortgages because most have established relationships with at
least several "subprime" banks.










					Registered Mortgage Broker - NYS Banking Department. Loans arranged through third party providers. This is not a commitment to lend. Loan programs subject to change without notification. Equal Housing Opportunity.