Introduction
As you think of actually settling down and owning a home, a bad mortgage loan is the last thing you would think about. It’s everyone’s wish to actually pay for the house at one go, this however does not happen to most people in the real world. It is only some fortunate few who are able to enjoy this privilege. The larger percentage of people is only those who purchase a new home with the help of a bad mortgage loan. This of course is not preferred by most people but they are forced purely by the circumstances. This may be humbling but positively it is a very good learning experience.
History
Generally, low credit scores disqualify people from accessing home loans and force them to take bad mortgages loans at last resort. Late payment of bills because of mismanagement and lack of funds is a key contributor to low credit scores. Another reason could be too many credit cards, too much shopping, large holiday expenses and too much fun on vacations which leads to very many bad debts. These bad debts throw you right into the highly risky category and hence getting a home loan is close to impossible. This forces you to take bad mortgages for lack of a better option.
Taking bad mortgages should not be taken as a death sentence. It does not mean that all is lost as it is in fact a good opportunity to start afresh and turn on a new page. It presents an opportunity and a challenge to actually improve your credit scores. It requires a lot of discipline and it does not happen miraculously. It begins by making a conscious effort to actually pay bills on time. One also needs to take control of their spending by monitoring and recurrent holiday expenses.
History
Bad mortgages are not entirely bad as their name suggests, they actually have a bright side. Despite your interest rates being high, they give you that opportunity to actually purchase that home in the long run. Their interest rates are relatively high but obviously better than paying house rent for a lifetime. Moreover, the high interest rates attracted by bad mortgages do not last forever. When your credit score begins to improve steadily which suggests that you are controlling your expenses and paying your bills on time, you can apply for refinancing. If your credit rating has improved then it automatically suggests that you qualify for more reasonable interest rates.
However, bad mortgages have their share of disadvantages too. The biggest disadvantage and drawback is the of course the fact that they attract higher interest rates compared to the ones paid by people with higher credit scores. The higher the interest rate the higher the monthly payment to be paid for the bad mortgage. This means that one could possibly settle for a house that is lower in value than the one wished for compelled by this high payments.
Concluion
Taking bad mortgages is clearly not the best alternative therefore one need to be very careful, take good care of recurrent expenses and pay bills on time so as maintain high credit scores.
