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Bad Credit Mortgage
I never ever thought I could find anything amusing in my mortgage – it just goes to show… Looking for a way to gamble your hard-earned cash this summer? Why not remortgage your property and try to make an educated guess on what sort of deal to take, fixed or variable?
This is a controversial subject, but personally I still think that tracker rates are currently your best bet whichever way rates go. However, the vast majority of UK borrowers opt for a fixed rate. This proportion tends to increase in a rising interest rate environment, which we could find ourselves in this year, or not. Who knows?
What a shame then that fixed mortgage rates are at their highest level in 10 years, with two-year rates averaging 6.75%.
Last week, swap rates, which determine the cost of fixed rate borrowing for lenders, rose to a new high of 6.49%, meaning it will now cost lenders even more to secure fixed rate funds. The unfortunate news for borrowers means fixed mortgage rates will probably get even higher in the coming weeks.
Some banks have already re-priced their fixed mortgage rates upwards and more mortgage lenders are expected to follow their lead, widening the gap between fixed and variable/tracker mortgage rates even further.
Not all mortgage loans are created alike. There are many variations among mortgage loans, meaning that some will be perfect for your situation, and others will be completely inappropriate. You need to understand mortgage loans and do the necessary research to be sure that you get the best financing deal possible.
The type of mortgage loan that you choose will determine how much you need to put up as a down payment, how much you’ll pay in interest, and for how long you’ll be making monthly payments. Likewise, the type of lender that you choose will significantly affect the terms and conditions that are available to you. The choice of lender can even influence how much you have to pay in closing costs for your home’s sale.
Assuming that you can afford to pay at least a 3% down payment, you should probably choose a conventional loan. Some of these are funded by federal agencies, like Freddie Mac and Fannie Mae, which bundle together mortgage loans and sell them to investors. These organizations don’t actually give you a mortgage loan, but they collaborate with traditional lenders to make sure that you get the financing you need.
There are limits on the size of the mortgage loans that these federal agencies can sponsor. If you need money in excess of these limits, then you’ll have to look for a “jumbo loan” outside of federal sponsorship.
Many potential homebuyers with limited income cannot afford to make large down payments for their mortgage loans. Consequently, government agencies have stepped up to help by creating programs for people who can make only a low down payment. For example, the Federal Housing Administration (FHA) assures banks that if you default on your loan, it will reimburse them for their losses. This allows you to get a mortgage loan with a down payment as low as 3%. The Veteran’s Administration offers similar services for potential homebuyers who have served in the armed forces.
Unfortunately, if you have a poor credit history, these mortgage loan programs may not be an option for you. If this is the case, conventional loans won’t be an option, and you’ll instead need to get a sub-prime loan. You’ll have to pay a lot more in monthly interest, because you represent a higher risk, but at least you’ll be able to own your own home.
There truly is a mortgage loan for everyone. You just have to do your research to find the mortgage loan that is best for you.