A mortgage loan is a loan agreement where borrowers put up their property as a guarantee. The borrower agrees to a loan contract in the duration of the mortgage that the home will be kept insured, taxes will be paid, and that the property will be properly maintained. Applying for a mortgage loan when you have poor credit or bad credit may be more difficult, but approvals are possible. Although local banks may be hesitant in approving you, online lenders usually have lower standards and better chances of approval.
Government loans and conventional loans
The two types of mortgage loans available are government loans and conventional loans. Government loans are generally easier to get approval for and may have little or no down payment. The loan terms of government loans also tend to be more agreeable for the borrower compared to conventional loans. Conventional loans, however, have several subtypes including those listed below.
Fixed rate mortgages
Interest rates for fixed rate mortgages are constant throughout the span of the loan. Usually, if you apply for shorter loan terms, your interest rates tend to be lower as well.
Adjustable rate mortgages or ARMs
The interest rates of ARMs depend on the fluctuation of the market. Initial payment is low, but interest rates tend to go up over time. Some loans are combined fixed rate mortgages and ARMs, and some loans can be switched back and forth from the two types.
Balloon loans are loans wherein you pay the interest rates in the duration of the loan, and when the loan term ends you pay the whole sum of the loan. This type of loan is favorable to those who intend to sell their homes at the end of the loan.
Bridge loans allow you to refinance your current home until it is sold, and at the same time, you are buying a new home for yourself.
Choose the best bad credit mortgage loan
There are many things you should look out for in bad credit mortgage loans. The most important aspect that people look at when låna med skulder hos Kronofogden is the APR or annual percentage rate. The APR is the summation of interest, extra fees, mortgage insurance, and other costs. For mortgages with variable interest rates, it’s best to look at their initial interest rates, the frequency of the interest rate change, how much the rates increase and/or decrease, and how much and how often the repayment terms and amounts may change. Looking at these may aid you in repaying your loan properly, without the risk of delaying and defaulting payments.