Loan Money

Have you been everywhere and spoken to every lender that would listen and still can?t get a bad credit mortgage loan?

Don?t take it personally---there are a few things out of your control working against you (like the elimination of 70+ bad credit mortgage lenders since January 2006, reduction of available programs for individuals with bad credit, increased government, political and consumer advocacy pressure on the return to more responsible lending practices to name a few). The end result is the same though---it?s becoming increasingly difficult to find GOOD mortgage options if you have bad credit.

Before we review the ?what? (as in ?what? are your options), it?s important to understand the ?why? (as in ?why? I wasn?t approved for a bad credit mortgage loan). There are several reasons why you were deemed ineligible for a bad credit mortgage loan, here is just a few:

- No credit references/history/active accounts.

- Not enough credit.

- Recent Chapter 7 or 11 bankruptcy filing or discharge.

- Tax liens.

- Recent foreclosure or notice of default (NOD).

- Recent late payments.

- Open judgments/garnishments/open collection accounts

- Lots of the above and other contributing factors not mentioned.

So what can you do if you have one or more of the above mentioned problems on your credit report? Here are some conventional and creative strategies you could consider:

1) Find a home seller that is willing to act as your bank. Look for opportunities in which the seller is willing to offer private financing (often referred to as seller financing). As the seller is offering the money, he/she has the opportunity to provide more favorable terms/conditions that someone with bad credit could otherwise get through the conventional lending channels.

2) Find a home seller that has a mortgage you can assume. There are tens of thousands of active mortgages in the marketplace that allow for assumability (an assumable mortgage is a mortgage contract that allows or does not forbid another party from assuming the mortgage from the original note holder). Many of the ARMs (adjustable rate mortgages), FHA and VA loans are assumable and in some cases, there is no need for you to qualify with the lender first (for example, any FHA loans originated before 12-14-1989/any VA loans originated before 3-1-1988 can be assumed by anyone [even if they don?t meet the lender requirements]).

3) Find a loan program that is tolerant to credit scores/history. There are loan programs available that allow borrowers with bad credit to get a ?near prime rate? mortgage with along with these great benefits/features:

- Individuals with no credit scores are eligible.

- Individuals with little established credit history are eligible (program allows for alternative credit references like your rent payment, cell phone bill, etc.).

- Individuals with recent late payments are eligible (program allows for some late payment issues and the max. loan amount will be adjusted accordingly).

- Individuals with open judgments/collections/garnishments (program doesn?t require all open collections to be paid---only child support and federal debt is required to be paid before closing).

- Up to 97% financing (for purchase transactions and rate and term refinances only---up to 95% cash out refinancing is allowed) allowed using just 1 loan (30 year fixed).

Although options for bad credit mortgage loans have gone through a lot of changes in 2007, there are still the ?good programs with good rates/terms? for those that are willing to do a little homework and legwork to find it.