With Bad Credit You Can't Get A Mortgage With Nothing Down

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With Bad Credit You Can't Get A Mortgage With Nothing Down - Right? Wrong!
By Tim Moss

You might not believe it but you can find lenders offering mortgages with nothing down. Of course, you'll pay a higher rate, but you can look at the possibility of buying a house despite your lousy credit. Better yet, if you write one you'll be able to slough off your bad credit history and start to live again. Normally, these loans do not require private mortgage insurance either.

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The two types of loans available are 100% financing or 80/20 which finances your mortgage with two loans. 100% financing is more simple but is not available from some of the lenders in this field of financing. More frequently, 80/20 financing is used but the contract is more complicated since the seller is often involved as the 20% financing source.

Lending criteria varies from lender to lender but most require any bankruptcies or foreclosures to be more than a year old whereas a conventional loan would look for discharge from two to four years ago.

You should work your credit score back to 600 or better and a large cash reserve helps. If you have something in excess of six month's cash reserves in balances or other liquid assets so much the better. You should be able to qualify for 80/20 financing with a score of 560.

Zero-down sub-prime mortgages are available from both conventional and niche sub-prime lenders and you should not be afraid to shop around for the best rates and conditions. Don't be intimidated by your own past history. It is what it is and you are a valid consumer in the marketplace. Don't be afraid to get all the information you need to make an informed decision from among several alternatives.

Remember there are differing options once a lender is located. An Adjustable Rate Mortgage (ARM) is easier to qualify for and will be rated lower. Fixed rate mortgages offer the security of a constant interest rate over the life of your loan. If you write an ARM now, you can work on improving your credit history, and refinance for a conventional mortgage with low interest rates some time later. Remember, you are then subject to the vagaries of the market and the future stability or lack thereof of future interest rates

Tim Moss is a seasoned financial executive and the webmaster of http://www.badcreditdebtcounselling.com, a site devoted to helping people suffering with the results of bad credit.

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