How to Get a Bad Credit Mortgage

Gregory J. Cook, EA, CPA+
Accredited Tax Advisor
Past President Alabama Society of Enrolled Agents
Past President Alabama Association of Accountants

How to Get a Bad Credit Mortgage

While it is difficult to get a bad credit mortgage, it is not impossible. However, a person who gets a mortgage on bad credit will almost always have to pay a high interest rate. In many instances it may be best for a person to concentrate on building up his or her credit and then buy a house later on down the line. However, those who need to buy a house right away on poor credit have several options to choose from.

A person who needs a bad credit mortgage loan should almost always work with a mortgage broker. A mortgage broker will work with various banks and find the one that will offer the best possible deal. This makes the process of finding a mortgage not only simple but also painless, as one will not have to deal with numerous rejections. The person taking out the mortgage does not have to pay for the services of the mortgage broker, as the mortgage broker is paid by the bank that provides the mortgage loan.

Those who do not want to work with a mortgage broker should see if getting a mortgage loan from a credit union is an option. One would need to sign up for an account with his or her local credit union for this to be possible. Credit unions, unlike banks, do not automatically deny a mortgage application simply because a person has bad credit. Instead, the credit union will look into the reasons why a person has bad credit. While many people have poor credit because they are compulsive buyers and do not know how to manage a budget, others have poor credit because they were laid off unexpectedly or got sick and had to pay high medical bills. Those who have poor credit through no fault of their own can often get a bad credit mortgage loan on fairly good terms by working with a credit union.

There are also financial institutions that specialize in providing bad credit mortgage loans. One can find these institutions either online or by looking through the local Yellow Pages. Such institutions are easy to work with because they are used to dealing with customers who have less than perfect credit. However, one should always do some research first and make sure the financial institution is bona fide. A genuine financial institution should be listed on the state's Better Business Bureau website and receive good ratings. It is also possible to find out more about any financial institution by typing in the institution's name online together with "complaints" or "customer reviews".

While obtaining a bad credit mortgage is not easy, it is quite possible. However, the first step is to determine whether or not it is the best course of action. As was noted above, the interest rates will not be low. Once a person has determined that obtaining a mortgage loan on poor or bad credit is the best option, then he or she should consider the options outlined above and choose the one that is the most suitable.

News and Articles from Bara Business Center

Greg Cook

Greg Cook on the Recovery Act ...

The Recovery Act was passed by Congress and signed into law by President Obama on February 17, 2009. The purpose of the $787 billion Recovery package is to jump-start the economy to create and save jobs. The Act specifies appropriations for a wide range of federal programs, and increases or extends certain benefits under Medicaid, unemployment compensation, and nutrition assistance programs. The legislation also reduces individual and corporate income tax collections (to an extent), and makes a variety of other changes to tax laws.

dollars

This Act will have far reaching consequences and we will be dealing with it for years to come (at least until 2018). Twenty-eight different agencies – such as the Departments of Education; Health and Human Services; and Energy – have been allocated a portion of the $787 billion in Recovery funds. Each agency develops specific plans for how it will spend its Recovery Act funds. The agencies then award grants and contracts to state governments or, in some cases, directly to schools, hospitals, contractors, or other organizations. The agencies are required to file weekly financial reports on how they are spending the money and their specific activities related to Recovery funds.

Read more about The Recovery Act

While Our Government Rolls the Dice with Deficit Spending ...

We endeavor to bring information to you that will help you keep taxes and your personal finances in check.

Quicken Articles

Have You Refinanced Your Home?
If you are one of thousands who locked into a lower home mortgage interest rate, then you've hit the savings jackpot! Besides getting one of the lowest rates in decades, you may be able to deduct some of the refinancing costs when you file your tax return. The “points” paid to get a home mortgage may be deductible as mortgage interest when you itemize on Form 1040's Schedule A. Points paid to get an original home mortgage may be fully deductible in the year paid. However, points paid solely to refinance a home mortgage usually must be deducted over the life of the loan.

For a refinanced mortgage, you figure the interest deduction by dividing the points paid by the number of payments you will make over the life of the loan. You may deduct points only for those payments made in the tax year. Say you paid $2,000 in points and you will make 360 payments on a 30-year mortgage. You could deduct $5.56 per monthly payment, or a total of $66.72 if you made 12 payments in one year. If you used part of the refinanced mortgage money to finance improvements to your home and if you meet certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid.

Also, if you are refinancing a mortgage for a second time, the balance of points paid for the first refinanced mortgage may be fully deductible at pay off. Other closing costs – such as appraisal fees and other non-interest fees – generally are not deductible. And the amount of your adjusted gross income could affect the amount of deductions you can take. Any way you look at it, between the lower interest rates and the tax savings, that's money you can take to the bank. For more information on deductions related to refinancing, contact your Cook and Co. Advisor.