Many people assume that if a person has poor credit, they cannot qualify for a mortgage at all, much less a mortgage with a good interest rate. However, there are several steps you can take in order to obtain a mortgage. Your success will depend on where you fall on the credit score range, among other criteria, but there are many avenues available for people with a less than perfect credit rating.
If a large traditional bank will not consider you for a mortgage loan, you should cultivate a relationship with a credit union. Many times, it is not possible to simply walk into a credit union and request a loan. You will need to establish a relationship with the credit union before they will consider your loan application. You can do this by opening and maintaining another type of account with the credit union, typically a checking or savings account. Keep a reasonable amount of money in this account, and be careful not to overdraw or otherwise cause negative activity to occur on this account. After maintaining this account for some time, you can speak to a lender at the credit union about applying for a mortgage. Keep in mind that your interest rate will be higher if your credit is not good, but credit unions offer great mortgages for people with bad credit.
Another alternative is to get the services of a subprime lender. This type of lender offers loans to people whose credit is “subprime”; that is, less than the ideal for lower interest rates. Many companies that specialized in this type of loan are now out of business, but subprime loans may still be available from conventional lenders or from a credit union. Consult with your loan officer to see if this option is available for you.
You must be persistent to obtain a loan in today’s difficult economic climate, but it is still very possible to obtain a loan with favorable interest rates.