Buying a House with Bad Credit

When applying for a mortgage loan with a bad credit history, these are some things to consider. 

• High interest: Everything else is equal. The weaker your credit history, the higher the interest rate you will get for a mortgage loan. 

• Higher Monthly Payments: A higher interest rate translates into higher monthly payments. It is essential to your breaking point, the point at which you are willing to turn back, at which the stress of the monthly payments will take a toll on your finances and life. Speak with your mortgage specialist, run the numbers, and figure out your breaking point. 

• High Required Down Payment: Most bad credit mortgage loans are conventional mortgage products. That means the lender will require you to put down a minimum of 20% of the property’s value. Let’s say the property is priced at $300,000.00; you will need to put down $60,000.000. 

• Your down payment can come from different sources: accumulated savings, RRSP, mutual funds, the sale of an existing property, gifts, insurance settlements, and more. If you are refinancing, lenders will lend only up to 80% of the property’s appraised value.
• Lender Fee and Probably Brokerage Fee: Most bad credit mortgage lenders will charge a lender fee of 1% to 3% of the approved mortgage loan amount. Brokerages will also charge a small fee for sourcing, securing, and managing your loan application.

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