December 9, 2021

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Mortgage Solutions for People with Poor Credit

3 min read
mortgage solutions

Whatever your reason for having poor credit, it shouldn’t keep you from being able to get a home of your own. Those who need guidance on how to afford a mortgage with poor credit should look to mortgage professionals. A simple consultation can lead to a number of different ways forward, ranging from new mortgage or refinance options to solutions designed specifically for those who have a troubled credit history. Here are some solutions you might find.

How Bad Credit Happens

Most people think that a bad credit rating only happens if you don’t pay your bills on time. While this is the most common way to receive a low credit score, it is far from the only one. Your existing credit balances can also negatively impact your score. If you have several accounts with high balances or don’t have a lot of available credit, lenders might view you as a higher risk. Similarly, a high number of new accounts or queries on your credit record can lower your score for a while. Such queries don’t have a long-term impact on your credit score, so you might find yourself with increased borrowing power a few months after opening several accounts as your credit history recovers from the short-term decline.

Getting a Mortgage with Bad Credit

A poor credit history can impact your ability to get unsecured credit lines like a new credit card, but it can also make it difficult for you to qualify for a secured loan like a home or automobile. If you have bad credit and need a mortgage, whether for a new purchase or a refinance, you might need to look to private lenders. If you are looking for an amount of money that you can pay back between one and five years, a private mortgage offers a short-term, interest-only solution that can allow you to get back on your feet. In other cases, you should look to a mortgage professional for advice on how to maximize your borrowing power. This could include consolidating debt or seeking a co-borrower to help you qualify for a mortgage.

A Better Understanding of Bad Credit

Experienced mortgage brokers like the ones at Clover Mortgage Solutions can offer more than advice—they can also offer understanding. Most people feel a sense of shame when their credit score dips below a certain level. They do not need to feel that, however. A professional mortgage broker understands that bad credit can happen for many reasons and not just because of poor financial management. Unexpected health problems, the loss of a job, or the addition of a new child can all contribute to credit debt and a reduced score. When you look for help in getting a mortgage with bad credit, make sure that the professional you deal with is understanding and sympathetic to your situation. You shouldn’t feel guilty about trying to improve your life.

Building Better Credit

Once you have a mortgage, it’s time to look toward the future. How do you improve your credit so you can get more favorable rates and terms in the future? For starters, you should do whatever you can to make your credit payments on time and avoid adding to your balance on revolving accounts. If you find yourself struggling to make payments, contacting your lender might allow you to negotiate a solution to make the financial burden easier. Of course, the mortgage you just obtained is a big part of your rebuilding efforts. By making your payments, you prove that you can be reliable with large debts, thus making you more desirable to other lenders. As your credit score gets better, you might be able to refinance in the future to get even better terms on your mortgage.

A bad credit score doesn’t have to derail your life. By consulting an experienced professional, you can still find mortgage solutions and begin rebuilding your financial standing.

Mike Sergeev for Clover Mortgage Solutions

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