Downpayment Ideas and Finding the Best Deal

by admin on February 3, 2014

There are different types of bad credit lenders that feature instant cash and quick decision making. The type of loan to apply for depends on the purpose, i.e. whether you are a first-time home buyer or need cash for repairs, home improvements, major purchases, and so on. Mortgages are one option for borrowers who need money to finance the purchase of a house, second home, or vacation home. Borrowers with poor credit are often offered adjustable rate mortgages and higher interest rates.

Even if your credit is less than perfect, offering a considerable down payment increases your chances of getting approved. Banks offer different financing options to home buyers who make a considerable down payment, including fixed and variable rate mortgages, and others. Down payment ideas include sources such as government assistance, taxable investments, your retirement savings, and others. Another idea is to sell miscellaneous assets that you don’t need any longer or to ask your parents or family for a small loan. A considerable down payment of 20 percent or more means a better interest rate. Thus even if you have poor credit, you may qualify for a fixed rate mortgage with affordable monthly payments.

Mortgages offer lower interest rates than other types of financing due to the presence of collateral. Borrowers with poor credit have better chances to qualify for a secured loan because banks take less risk. Examples of assets to be used as collateral include money market and asset-backed securities, gold, bank loans, and others.

Examples of collateral include cash equivalents, jewelry, equipment, and more. Financial institutions also offer unsecured loans for major purchases, repairs, emergencies, etc. Even if you qualify for an unsecured loan, expect to get a higher interest rate. Obviously, borrowers with good credit and existing customers are in a better position. Borrowers are usually asked to present proof of income and employment. Whether you are contract or probationary employee is also taken into account. Whatever the case, make sure you list all sources of income, including part-time employment, rental income, cash gifts, cash in savings accounts, and others. Approval also depends on your income level, i.e. a high income is considered a compensating factor. Whether you are a casual or part-time employee is also taken into account. Finding a second job may help negotiate better terms and rates. The differences between secured and unsecured loans, are that the latter come with shorter repayment periods. Mortgages come with terms of 20 – 35 years. If you have poor credit, a loan with affordable monthly payments makes it easier to build credit, especially if you have multiple debts.

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