A bad credit mortgage is available for those of us that don’t have the best credit rating and because qualifying for a mortgage needs good credit there aren’t many other options. Your credit could be unfavorable because of missed payments or maybe just because you are too young to have a credit history. Whatever the reason is for your poor credit, bad credit mortgages are something that you can use in order to get that house that you have been dreaming of. In this article we will discuss some things that you must know before you get such a mortgage.The penalty of prepayment
Find out if any prospective bad credit mortgage loans have a penalty for you paying off your mortgage early. It is a common penalty that is applied to mortgages. This is mainly due to the fact that your interest rate fluctuates and usually the interest rate is lower at the beginning of your mortgage. Make sure that the mortgage that you are applying for doesn’t have this penalty otherwise you may be forced to pay a percentage of the principle that is outstanding at the time of the payment.Bad credit mortgage interest rate
The interest rate is the cost of borrowing money. When you are taking out a loan the lender will charge you a percentage of interest that you will need to pay. Interest rates can be a fixed rate or it can be an adjustable rate. A fixed rate means that the interest will be the same throughout the life of the mortgage while an adjustable rate means that the interest will change throughout the life of the mortgage.Closing costs on bad credit mortgages
Closing costs can be an unexpected surprise for some borrowers. Closing costs are fees and charges that you will need to pay at the time of the loan and when the title of the house has been transferred. Closing costs will be a percentage of the mortgage usually 2 to 3%.A bad credit mortgage loan can make your dream come true of owning your very own home. Poor credit gives you few options and if you want to borrow a large sum of money then lenders aren’t going to approve you for it. A bad credit mortgage is a great option for those of us that have poor credit and want to get our lives started. Because as we all know, a mortgage nowadays is a necessity for every person.
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