The loan strategy for
Getting into a bad credit state is easy to do. Getting out is not that easy, but it takes time. And what if you want to apply for a home loan (taux hypothécaire) and buy a home now?
What does a mortgage lender look at when he is deciding if he should grant a home loan to a borrower? One of the most critical things is the borrower?s credit report. This will give the lender an idea of the risk he is going to have with this borrower.
If you do have less than perfect credit there is a strategy that you can follow in order to achieve your dream of owning a home. You will need to take it in three to four steps; it can?t happen right away, but following these steps will mean that eventually you will have the best home loan rates (taux hypothèque) available to you.
Step 1: Secure a mortgage
You can get a mortgage, even with a bad credit report. You will just have to accept some limitations that those who have good credit ratings don?t have to accept.
There are a number of lenders (at least 10) who specialize in these types of loans and have looser credit criteria than other lenders. You can usually obtain a mortgage with a short maturity period, such as three years. This is not normally a good idea, but it will get you started.
Just remember that the two most important aspects that impact your interest rate are your credit report and your down payment.
Step 2: Correct your credit
During the first two years of your home loan, you will have the chance to bring your credit back to a good state. It is important to join with a good mortgage financing credit counselor specializing in loans for less than perfect credit. He will be give you guidance as to the steps you should take to repair your credit.
Step 3: Renegotiate your mortgage at the best rate possible.
Now that your credit has repaired, you will find lending institutions who are able to offer you a mortgage at a very good rate (taux hypothécaire). It is a question of working with the right sort of lender and presenting your case properly. If your credit was extremely damaged, you may have to have an additional step before you can start to get really good rates - taux hypothèque. (taux hypothèque)
Advantages:
? Buy a house sooner and be able to benefit from any upswings in home values. (Read our publication: Will housing prices continue to rise? Forecast for 2006 and 2007?)
? You have established a period of time during which you can work on your credit report
? You will get much better rates (taux hypothèque) in the future - taux hypothèque
Disadvantages
? The interest rate for the first three years is frequently very high - taux hypothecaire.
? The mortgage payments will probably be very high (it is possible in certain cases to keep the mortgage payments lower by increasing the amortization period during step one in order to reduce it in the third step).
? Lenders often demand more documentation in addition to the mortgage note.
? The down payment is very critical, but it is possible to have a no down payment mortgage in some cases.
? Assessment fees are the responsibility of the buyer
? It is not possible to receive a pre-authorization, but a good mortgage financing credit counselor who specializes in this type of loan should be able to help you.
CAUTION:
Certain mortgage consultants charge additional commission for ?difficult? cases. It is normal for the broker to require fees if the financial institution does not pay a commission or if the amount of the mortgage is more than $90,000. In most cases (more than 80% of them) the lender pays a commission to the broker.
Never do business with a broker who:
? Demands payment of their fees before having completed the loan financing (at closing)
? Demands very high fees (a commission of 1.8% of the financed amount is normal, with a minimum of $1,500).
In summary, you can get a home loan and own a home now even if your credit is less than perfect. When you do, you will be able to benefit from the fact that housing prices are continuing to rise. With some effort on your part plus the help of a good mortgage financing credit counselor who specializes in less than perfect credit, you will even (sooner or later) get the best interest rates - taux hypothecaire.
Set up an appointment now with the right kind of mortgage consultant who can assist you with your less than perfect credit problems. Find out what can be done in your particular case. There is no fee or obligation to find out how he can help you.
Gregory is an Accredited Mortgage Professional (AMP). To get more information on mortgage rates - taux hypothécaire, please visit: Hypothèque - Get a loan
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