If a person can get a mortgage because of bad credit and existing debt …….?

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If interest rates remain high, while the existing debts are paid and, finally, clearly for a mortgage?

  1. Reply
    April 29, 2011 at 11:17 pm

    If the person is able to qualify for a mortgage, they will pay high interest rates and need a lot of cash for a down payment.
    The rate does not automatically change when the credit is repaired, because you have agreed to a mortgage with certain terms.
    However, once your credit is more desirable you can always refinance the loan to get the most favorable interest rates available at the time you refinance.

  2. Reply
    Steve D
    April 30, 2011 at 12:09 am

    I gather the scenario is – person does not qualify now, so doesn’t buy house…person spends some time repairing credit..person repairs credit and is now eligible for mortgage…

    At first, when the person is eligible, he/she will probably need a 20% deposit and encounter high interest rates. However, if the person continues to wait and rebuilds credit further, the required interest rate will begin to fall. It is possible that as the credit continues to be repaired, the required deposit may also fall, but that will also be dependent upon outside factors down the road (the economy, lending practices, etc.).

    If when you first can qualify the rates seem high, wait and keep on rebuilding credit – there is no profit in taking a high rate mortgage just to buy a house – you could end up paying much more in additional interest than you earn in appreciation.

  3. Reply
    My Take on It
    April 30, 2011 at 12:16 am

    If they get their credit back on track and their debt paid off or paid down, they would be qualified for whatever rates their particular credit score/ report entitles them to.

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