When looking for a mortgage deal, your credit, good or bad, is only ONE factor lenders look at when deciding what interest rate you will receive.
That's not to say, your credit history is NOT critical to you receiving the best interest rate but it's not the only factor a mortgage lender looks at. And the evidence is quite revealing.
Here's a quick overview...
It has been revealed in a study of about 400 bad credit borrowers (below 650 credit score) that they simply did not aggressively compare rates - that is, they went with the first mortgage quote they received.
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Post interview, it was concluded that about 65% of these borrowers could have been offered a better rate had they shopped more than one lender. Some rates were lower by as much as 4.25%
Why does this happen?
Because most bad credit borrowers don't consider or realize their loan as a competitive commodity among brokers.
You may have bad credit BUT...Are you upwardly mobile? Did your spouse just start working creating additional income? Do you have cash reserves?
These other positive factors may 'neutralize' your bad credit giving you the chance to lower your interest rate by proving you are a lower risk to a lender.
If your broker doesn't address these factors and is fixated only on your credit score it's time to move on - get at least 3 quotes as a rule.
Does it work?
Absolutely, however it is imperative you work with lenders that specialize in borrowers with damaged credit. See the link at bottom for 4 of the top bad credit borrowers.
What should you do?
If you are looking for a loan knowing you have bad credit but think other positive factors may make you a lower financial risk to the lender, take action!
You need to contact bad credit loan specialists and describe your scenario fully - most will be able to give you a good guestimate rate over the phone. Repeat the process with at least 2 more lenders.
Remember...just about everything in life is negotiable and that means your mortgage interest rate.
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