What to Know about a Bad Credit Mortgage

As a rule, to buy a home you must have 20% down and a good credit history. But there is still good news for the bad credit “owners”: in fact, there is no need to have large down payment or perfect credit order to purchase a home. This article aims to explain the characteristics which mortgage lenders regard as a bad credit mortgage. Usually consumers and lenders precept the definition of a bad credit mortgage in a different way, this fact then leads to various misunderstandings.

Common Red Flags for Mortgages Lenders

Pattern of Delinquencies – it is a record of your late payments which is always possible to work around, but most lenders will give you much more scrutiny if such a record is not perfect; in the case of some problems with this paper you chances on getting not just bad credit mortgage but any second mortgages falls considerably.

Late Payments on Student Loans – in case you had any late payment on student loans within the past year, you are much more likely to be approved for conventional financing, something like FHA – governmental financing.

Late Payments on Mortgages – only one single late payment in the past year is permitted, but just in case you are able to explain it and provide your second mortgages lender with all the required documents.

Getting a Second Mortgage with Bad Credit

You should know about a thing called investor overlays. These are adjustments to guidelines or pricing which are created in favor of the lender. It is important to know because this is exactly that fact why one lender can provide you with second mortgages even with bad credit or minimal down payment, and another one cannot do the mortgage in some instances.

Later these are overlays which protect lenders against any potential future losses from the second mortgages they originate, conserving all the profit margins and buyback risks. In another way, it can shift the risk which is translated to cost – on to the consumer. This is done by limiting the ability to borrow via higher mortgage’s fee, it also reduces purchase price, or lowers debt ratio.

Note: Every bad credit mortgage lender has his or her investor overlays, it is the way how all mortgage companies operate, the crucial idea is to find and then work with that bad credit lender whose overlays are minimal.

Do Some Homework

  • Credit score. Before applying for any bad credit or second mortgage check your credit score. Get a copy of your annual credit report free, this information can help you when choosing the appropriate mortgages lender.
  • Documents. Get as many documents as you can to support your credit story and its challenges to be able to explain it to the lenders from A to Z if asked during the process of applying for second mortgages.
  • Specification. When you are talking to any potential mortgages lender, always try to be very specific. Do not be afraid to explain everything in great detail about your needs and concerns. Give the most complete description of your situation. Also before even explaining anything ask the lenders about any special conditions that they have for their bad credit mortgage customers in order to save your time and money from the very beginning.

Some data for the article was taken from the Knowledge Base of Mortgage Canada Wide Financial Company that provides second mortgages in Toronto and GTA.

Virtual Banking Isn’t For Me

Hubby and I recently switched banks in an effort to save money on bank fees. We didn’t leave our former bank on bad terms, we were just looking to free up a little room in our monthly budget so we switched to a no-fee bank.This change hasn’t been without a few bumps in the road but yesterday was my breaking point.

It’s 2013 and I still get my paycheque in physical cheque form. I’m not kidding. I think I’m the last person in the world who gets paid this way. I went to university for six years to get this education you’d think my employer would offer direct deposit but the fact is that there are less than ten employees and direct deposit is very expensive. Our office manager can take care of it all. Though it can be a bit of a scramble to get paid on time when the boss is on vacation, they’re pretty good at making sure we have it on time, often paying is early if needed.

Needless to say, having holds on deposits for us is not an option. We can’t afford to deposit my income and have it held for five days while the cheque clears. It would totally screw up our budget and bill paying system. When I brought these points up to our current bank they basically said there’s nothing they can do other than offering us an immediate access to funds upwards of $200. Sorry this isn’t going to work. I called to complain yesterday and asked to speak to the supervisor. She basically said her hands were tied, there was nothing they could do to help us.

If I had an actual branch to deal with would be more options for us in terms of immediate access to funds; or with teller services, having certain cheques cleared.

I respect that new customers at banks may have a short initiation period of sorts but c’ommon! I mean charge my $2000 or something if I have an NSF, I don’t care what you feel you may need to do to cover your asses I just want immediate access to my money. If we had a bad history I get that, but we don’t.

I didn’t realize how much I enjoyed the amenities of a traditional banking system until I didn’t have them. Though I rarely use the teller services, I like having the option when issues arise. I like figuring problems out face-to-face and building relationships with the people who hold my money. I miss being able to call the bank to ask Betty/Bob/Ben a question. I miss the people.

And so, next week hubby and I have an appointment with the bank that holds our mortgage and RESP to see what we can work out in terms of opening new accounts with them. Based on the conversation I already had with them it sounds promising.

I’m looking forward to sitting down and getting to know people again. Put faces to names and trust the people who hold our money.

What sort of accounts/banking system do you use?