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Even if you have bad credit, you have some excellent options for obtaining a mortgage. You should know however, that many major lenders have put more restrictions and or change terms in many of their “sub – prime” mortgage products. Rapidly rising delinquency rates have brought about these changes. You still have some workable options, however.
You should first examine the reasons for your bad credit and what your plans are to fix your situation. You will have the option of selecting fixed rate for adjustable rate mortgage loans. However your rate will reflect your current credit situation. If you have designed a plan to correct your credit deficiencies, your best option may be an adjustable rate loan with your beginning rate fixed for the first two or three years. That time frame should provide you sufficient opportunity to rebuild your credit.
Prior to the first adjustment date you could then refinance at a much lower interest rate, fixed or adjustable. However, if you are in a financial situation that will take longer to correct, your best option may be a 30 year fixed rate loan to avoid any unpleasant surprises that could only worsen your predicament. You will receive an interest rate approximately one to three percent higher than the current best available rate but your immediate problems will be solved. The rest is up to you. Take whatever action necessary to correct your credit situation and refinance your loan at the earliest opportunity.