Getting a Mortgage with Bad Credit
What to Do?
Getting a mortgage with bad credit can be really challenging. If you are in need of credit repair but have to have a mortgage before the repairs can be done, one of your options is co-signing.
Enlisting a co-signer for a mortgage loan is an option if you have been subject to a major financial situation that has impacted your credit score so much so that the lenders have no desire to lend you money.
Here is the catch when getting a mortgage with bad credit. In order to rebuild or repair your credit score, you have to get credit. In order to get credit you have to have good credit. It can be a vicious cycle.
That is where a co-signer comes in. When you have a cosigner, you get the benefit of the other person’s good credit score. The other person’s credit score will help you get the mortgage loan with a reasonable interest rate.
Pros and Cons:
You take a risk because even though you may have a low credit score, you don’t want to have additional bad credit information if your co-signer doesn’t make payments.
When using a co-signer, both the co-signer and you are responsible for prompt payments. If either of you do not make the payment as required by the mortgage agreement, then the damaging results will affect both of you.
That being said, you can really benefit with a co-signing arrangement with someone that has a good credit score and has a history of making payments on time.
This can help to increase your credit score so that next time you apply for a loan, you can get the financing on your own.
A cosigning arrangement can certainly help you on your credit repair journey, especially when you have very few or no alternatives.
The extra benefit is the message this sends to the lenders. It shows lenders that an individual trusts in you enough to make payments on a loan that the cosigner is risking.
Even with a co-signer, this loan will show up on your credit and your score will increase with regular payment of your loan.
Bonus: If you use this getting a mortgage with bad credit cosigning method, it will serve as a great credit repair tool for you. The mortgage repayment shows up on your credit, as well as the co-signer’s credit. Good repayment history increases credit scores.
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