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    What to Ask about Getting a Mortgage with Bad Credit

    Getting a mortgage with bad credit might seem like the impossible dream, but it’s actually a lot easier than you might think. Just because you have a bad credit score doesn’t mean you have to give up all hope of buying a home. Although often having a score below 600 will often make it extremely difficult to get some kinds of loans, lenders are less strict about giving certain types of loans to people with worse credit scores as long as they've demonstrated some responsibility with their credit and finances. Among the best places to get a mortgage with bad credit are the Federal Housing Administration, US Bank and Lending Tree. If you are trying to get a mortgage with bad credit, here are some questions you should ask.

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    Why would a lender let me take out a mortgage?
    Ultimately, lending money is a judgement call for lenders. If a lender can see you are typically good at making payments, but maybe had a falling out due to factors beyond your control like job loss, then they may be willing to see past your score to grant you a loan, especially in the current economic climate.
    Are there government programs that can help me?
    If you cannot acquire a mortgage from a more lenient bank or lender, then consider the Federal Housing Administration which has much more flexible credit requirements. Even if your credit score is below 580, you can qualify for a FHA loan with a down payment of 10 percent or higher.
    Can I convince a lender to accept my application?
    If you provide a detailed explanation of all of the negative marks on your credit score then you may be able to convince them that lending money to you does not pose too high of a risk. Whether the reason for your poor credit is due to job loss, decline in health or depression, the lender will want to know that it won’t happen again.
    What can I do to show I’m responsible?
    One great way to show lenders that you are a responsible borrower is to make all of your rent payments on time for at least a full year. This will show how capable you are of making mortgage payments. Paying all of your other bills on time for a full year will also help tremendously.
    What are my options for getting a mortgage with bad credit?
    With bad credit you may have to accept mortgages with higher interest rates. Adjustable rate mortgages may be another option for you, in which the interest rate can change over the years. Comparing your options is even more important when you're already facing high interest rates. Contact several lenders in your area so you can compare as many loan offers as possible.
    Should I consider buying an inexpensive home?
    It might seem obvious, but don’t go outside your price range, if you try to acquire a half-million dollar home, you’ll probably get rejected. Find a less expensive home that has been previously lived in and might need a few repairs, but not too many repairs because you don’t want to get trapped in a money pit.
    What can I do to raise my credit score?
    Paying your bills on time and making all of your credit payments on time will help you immensely. You can also apply for a secured credit card in which you make a security deposit and make payments month-to-month. As for old debt, you can pay it off and wait for derogatory marks to expire after 7 years.
    Can I get a co-signer?
    A co-signer will definitely help you acquire a mortgage, as long as the co-signer is financially responsible. Getting a friend or family member to co-sign for your mortgage will put responsibility on them to make payments when you cannot. If you default on your mortgage, then you can damage both you and your co-signer’s credit scores.
    Will making a higher down payment help?
    Making a higher down payment can definitely help you acquire a mortgage, because it decreases the amount of money you need to borrow, and decreases the lender’s risk of lending you that money.