Mortgage lenders that help people with damaged credit?

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Are there any mortgage companies out there that can help people with damaged credit? I have been renting a condo and the complex we are in has some wonderful units for sale and they are going very cheap right now. I have very bad credit due to student loans (which are now current and in repayment) I and also medical bills. I have a good income and been in the same field for several years now. I am a single parent and am a teacher as well. Dont know if there are any companies that have special programs with those things in mind.

7 Comments
  1. Reply
    Steve D
    May 3, 2011 at 12:17 am

    Unfortunately, the recent housing bust has tightened up mortgage credit markets and banks are only lending to folks with higher credit scores.

  2. Reply
    bdancer222
    May 3, 2011 at 12:37 am

    Be very leary of any mortgage lender that promises to help you get a mortgage in spite of your bad credit. It is likely to cost you a lot of money.

    Legitimate lenders are simply not giving loans to people with poor credit. You need to work on rebuilding your credit. The student loan repayment program will probably eventually start showing on time payments. You need at least 24 months of consistent, on time payment history to improve your score.

    Mortgage lender will also require you to resolve any derogatory items on your credit report. Negotiate settlement of those medical bills. Try to get pay for delete agreements — you pay and they remove the item from your credit report. Depending on how old the medical bills, you may be able to settle for 25% to 50% in a lump sum payment. Get any settlement ageement in writing before you pay. Keep- that agreement along with your payment proof,forever. Do not give collectors direct access to your bank account.

  3. Reply
    MadMan
    May 3, 2011 at 1:21 am

    In years past, you would have been a sub prime borrower. Sub prime borrowers pull us into this recession so now no one will lend to you.

    You do not state how bad your credit is so perhaps an FHA loan might be appropriate but given that you appear to have at least some current debt, don’t expect to get very much.

  4. Reply
    mindcrime828
    May 3, 2011 at 1:49 am

    Part of the financial crisis was driven from the amount of sub-prime mortgages that were issued. Sub-prime mortgages are those given to lenders with poor credit history. Due to that fact, banks and mortgage companies have greatly tightened up on credit requirements, so if your credit is damaged it will be very difficult to find a lender. If you get your credit score above 620, and your credit history has less than two 30 day late payments within the last two years, you might qualify for a FHA loan.

  5. Reply
    bloomorningglory
    May 3, 2011 at 2:27 am

    Many lenders are not knowledgeable about credit (other than knowing what score you need) so be wary of taking advice from them. One thing I can tell you is that the medical collections are hurting. If you pay them off, they need to be removed from your credit report due to HIPAA. That will give your score a nice little boost. It is also good to see you have your student loans back on track. So pay off the medical debt, give it a month or so to clear your report, then check your credit scores at MyFICO.com. If both of your scores are 620 or above, look for a mortgage broker to get you preapproved. Mortgage brokers have the best access to multiple banks and loan programs so that is why I always recommend them over the average bank. Good luck!

  6. Reply
    Jester_D_Bear
    May 3, 2011 at 3:22 am

    I sympathize with your situation. I made the mistake (or was basically forced into) a situation where my student loans went bad, because I could not afford 700 dollars a month, and I all 3 of my part time jobs within a month of each other, and my car died as well. Back then they didn’t have to work with you on the loans, and they didn’t.

    Thankfully, after a few years I dug myself out, got my loans current, but my credit was very bad for years; as you know a student loan judgment is probably treated worse than a bankruptcy.

    So for your situation, it is going to depend , are your student loans in payment or in default, or have you fully rehabilitated your loans?

    The bottom line is, unless you are fully rehabed and it has been many years (5-7) since that happened, you are going to have a very hard time getting a mortgage in this lending climate.

    Your best hope is to find someone who is willing to back the note themselves. That will take someone willing to bet on you, so the work you have done to fix things may carry some weight with them.

    The prices have come down so much because units just are not moving, so there is, in my opinion, a real chance that an owner with the means to do so might be willing to finance you. However, obviously you will probably not be able to bargain quite as good a deal on the price that way.

    In fact, you may be able to find someone willing to carry the note if you offer a certain premium on your price for owner financing. I can’t guarantee you success with this, but it is at least some hope. I do wish you the best on this, like I said, I have been where you are.

  7. Reply
    Diane
    May 3, 2011 at 4:14 am

    Instead of the traditional mortgage method, consider FSBO. You will still need to provide credit information to the seller but the qualifications are not as strict. The seller can then sale the mortgage note and receive cash.

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