There are two types of mortgage lenders, but which is right for you when your credit is less than perfect? Unless you consult with a mortgage broker, you may never know! Here we’re going to talk about mortgage brokers; be they conventional or alternative, there’s always a financing solution out there waiting for you. Don’t let bad credit be a road block to getting a good deal!
What Exactly is Bad Credit?
Bad credit can be different things to different people, so let’s put it into perspective: a score of “600” is considered average. Most people really land around the 550 mark, and some land around 500 who’ve had a little trouble. A score of “800” is considered the best you can have, but very few people ever have this kind of credit. So if you have “600” or better, you’re in good shape to get a mortgage from just about any lender.
If your score falls below this, you may want to consider credit repair or debt consolidation. You shouldn’t have to take a worse rate just because your credit sucks. You should be able to get everything you need from a mortgage broker. They can first tell you what you need to do to improve your credit. They’ll go over your finances and help you know if you’re equipped to get a mortgage now or if you should save up a little more.
What Are the Differences Between Mortgage Lenders?
There are two main types of mortgage lenders: conventional and alternative. Conventional mortgage lenders will help you get the money you need to buy a home or refinance your current mortgage, but they want people who have good to great credit to borrow from them. While many will give mortgages to people who don’t have good credit, they’ll take it out in interest and make it not worth pursuing.
Alternative financing with private mortgage lenders is easy. Instead of borrowing from a bank, you’ll be borrowing from lending companies or private individuals who give these types of loans. With an alternative lender you won’t have to worry so much about your credit score as you will your credit history.
If you wander too far out of the 500 credit range, you’ll still need credit repair with these kinds of loans. You’re going to want to raise your score by 50 points over a few months (this is totally doable), and you’ll be able to use this as leverage to get a good loan.
Which is Right for You?
Each case is different and you’ll want to talk to a Toronto mortgage broker to find out which one will be right for you. Some people with great credit may find that a private mortgage will give them a better deal, and others with average to bad credit could get a great deal with a conventional lender. No matter what you do, make sure you have a mortgage broker working with you.
To learn more about our great rates on bad credit mortgages, click here: http://www.homebasemortgages.ca/debt-consolidation/bad-credit/