When it comes to financing a home, there’s more than one option open to you. That’s good news when the bank has already turned you down. Unfortunately, there’s a lot of misinformation out there about alternative types of lending. That includes working with a lender who is willing to provide a poor credit mortgage to anyone who has experienced credit issues in the last few years. Before you listen to the myths, get information from a reliable source. Here are some examples of myths that don’t hold up after you look a little closer.
The Interest Rates Will Kill You
It’s no secret that the interest rates with many alternative mortgages are higher than what the bank would provide. What may surprise you is that some lenders who offer higher risk mortgages charge interest rates that are more competitive than many people think.
You can bet that there are lenders out there who will charge outrageous rates, but don’t assume they are the only option that you will find. By choosing to work with a reputable alternative lender, it’s possible to lock in mortgage terms that you can manage, including rates that won’t eat you alive.
There Are More Fees and Charges to Pay
This is another example of a myth that seeks to paint all alternative lenders with the same brush. It’s possible to find bad credit mortgages that have few if any fees and charges that are not present with more traditional financing. Focusing the search on lenders who are known to offer more competitive terms will yield wonderful results that allow you to buy a home and keep the mortgage costs within reason.
Alternative Lenders Have No Hearts
The image of the alternative lender is sometimes that of a loan shark. Nothing really matters unless the payments keep rolling in. If you are late or miss one, they’re ready to swoop in, grab the house, and kick you to the curb.
Understand that alternative lenders are not any more likely to foreclose on a property than traditional lenders. They understand that financial setbacks can happen and will often seek to work with homeowners to come up with a mutually agreeable resolution. These lenders also understand how expensive and drawn out a foreclosure can be and have no desire to deal with all the red tape. By choosing to work with a reputable lender, you’ll have an ally to help you through a troubled time rather than an enemy who can’t wait for you to fail.
You Can’t Refinance a Bad Credit Mortgage
Perhaps one of the most common myths about a bad credit mortgage is that lenders make it as hard as possible to refinance the debt. That’s not true. Many alternative lenders are happy to refinance mortgages when the homeowner in question has a proven track record of timely payments. Depending on what has happened with your credit score since the original mortgage, that lender may be happy to roll you into financing that comes with a better interest rate.
Before buying into the myths, take the time to talk with a few lenders. Whether you need a mortgage to buy a first home or would like to check out the options for Mortgage Central Nationwide – Second Mortgages in the GTA to accomplish some other purpose, there are bound to be ethical and reliable lenders who will be happy to consider your application and offer terms and conditions that are better than you thought possible.