Mortgage Loans With Bad Credit: 5 Issues To Clarify Before Applying

There is no doubt that securing a mortgage loan with bad credit is never going to be easy. Between affordability and providing assurance of regular repayments, bad credit scores create a number of hurdles that make approval more difficult to get.There is some good news for bad credit borrowers. Buying a home is still a realistic possibility, with lenders willing to grant mortgage approval with poor credit scores, but only if some extra expense is accepted. This extra expense should relate to interest rates, but there can other charges too.But there is no reason for applicants to jump to the first mortgage loan offered to them. To help in assessing the worth of any mortgage offer, there are some issues that should be clarified before signing any agreement.Where To ApplyOf course, a key matter to decide on first is where to apply for a mortgage loan with bad credit. The traditional mortgage lender is always a good option, but is not necessarily the best. There are alternative sources for mortgages. Online lenders offer better deals in general, with lower interest and more accommodating repayment schedules.Usually, this means a longer mortgage term, such as 40 years rather than 30. But while this means more interest is paid over the lifetime of the mortgage, it also means mortgage approval with poor credit scores is more likely.However, it is essential that a reputable mortgage provider is identified before any deal is signed. Checking the background of prospective lenders on the BBB website is the best way. But, there are other issues to clarify before choosing a mortgage loan. Here are 5 of the most significant.1.     Extra Fees Due To Your Low Credit ScoreLenders are interested in making as large a profit as possible, so when considering a mortgage loan with bad credit, it is important to find out if they have added fees because of your low credit score. There is no reason to accept this. With a Good Faith Estimate, every detail of the costing is provided.2.     Lower Interest In Return For Higher ChargesSometimes a low interest rate is charged by the lender, suggesting getting mortgage approval with poor credit scores is an excellent result. But lenders recoup the interest by increasing the fees on the deal. Technically, there is nothing wrong with this, but calculate the difference to see if it works out in your favor.3.     Interest Rate Compared To Market RatesMortgage loan providers tend to be quick to adjust interest rates up when the market dictates, but are slow to adjust them down. So, check on the Internet for information on what the current rates are. This may end up saving a significant amount of money, even if your application is considered a ‘credit risk’.4. The Terms Of Any Pre-Payment Penalty?It is not exactly fashionable for lenders to charge pre-payment penalties, so it is important to find out if a lender is going to charge one. Though not openly advertised, it can end up costing a pretty penny. This can be significant when getting a mortgage loan with bad credit, especially if refinancing the mortgage in the future.5. Are The Repayments Really Affordable this?The final issue is probably the most important. Affordability is essential if there is to be any chance of securing approval with poor credit scores. But affordability must be in the long term, not only right now. The secret is to take on a mortgage loan that is comfortable to repay right now. That way there is a better chance of handling increases in the future. Most mortgage advisors will recommend keeping savings worth 6 months living expenses in reserve too.