Choosing Between Bad Credit Mortgages
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How do I choose between different bad credit mortgages?
Nobody entering into home ownership is bound to a single mortgage option. Even with bad credit mortgages, there are options that you should compare to make the best choice. If you are looking into bad credit mortgages, here are a few things to look out for.
- Penalties – As a higher risk loan, many lenders will have strict rules regarding payment and stiff penalties for late or missed payments. Get detailed answers with regards to the penalties associated with your bad credit mortgages.
- Prepayment – Bad credit mortgages often offer very few ‘outs' with regards to the loan. You will want to look only at loans that will not lock you in for more than 3 years. If you make your payments, you should be able to qualify for a better loan within that time period and would be wise to refinance.
- Rewards – Some bad credit mortgages come with incentives for prompt payments. Often, you can reduce your rate over time by being a good borrower.
When choosing between different scenarios, ask about these types of incentives. Comparing bad credit mortgages is just like comparing any other type of mortgage. You always need to get all of the answers and remember to keep your eye on the future and not get stuck in a loan you can't get out of.