There are many degrees of bad credit, and many people fear that their credit is "bad" because they missed 2 car payments in a row 9 months ago, or because they have a collection account or several derogatory items in their recent credit history. And they may well be right, depending on exactly how late, and how long ago these things happened. But there are many factors that determine an individuals credit score. Having many "good" tradelines or accounts may compensate for the few "bad" or derogatory ones. In any event, it is wise to check your credit often to see what exactly your score looks like.
Now, to address the question directly, if you have "bad" credit, you may still be eligible for a mortgage. The FHA insured loans are usually the best option for those with imperfect scores, but you'd better be able to fully document your income, demonstrate the ability to repay by having a low debt to income ratio, and you may also need other compensating factors such as "reserves' (assets retained after closing) or a larger than minimum down payment.
Before you could visit the lender for a mortgage deal on your home, you were not very sure of the kind of deals that you could clinch. The primary obstacle, as you felt, was your bad credit history. To add to the fears, there were a few friends of yours who held that the deals offered to you will not be at par with the regular mortgages.
Nevertheless, before you decide not to mortgage in apprehension of bad deals, let us make it clear that mortgages generally do not give much importance to bad credit history. Through this article, we will inform borrowers of bad credit mortgages which are basically mortgages for the people with bad credit history.
Find an independent mortgage broker and check that he/she deals in bad credit mortgages. Its very important that you go to someone like this rather than just going to your bank. The broker can help you avoid getting further rejections, which will make your credit rating WORSE.
Be honest. The broker cant help you if you dont disclose ALL the relevant information. It may be embarrassing but its nothing the broker hasnt heard before in fact he/she has probably heard a lot worse stories than yours. Answer all questions fully and honestly. If the broker knows your exact situation, he/she should be able to scour the market to find a bad credit mortgage lender who will accept you. If you conceal information because it doesnt show you in a good light, you risk further rejection which will certainly not help you.
