Florida is a lovely place to have a house in; unfortunately the
real estate prices are rather forbidding for most. And for
someone with a bad credit past, it gets tougher. However, if
Florida real estate has is in your dreams, you can still get a
mortgage loan, even with a bad credit if you know how to look
for it.
Before we get into shopping for the best mortgage rates, let us
understand how the credit score of a borrower determines the
scope of his search. Most lenders will willingly lend to a
person with 'A' credit score but someone with a 'C' or a 'D'
grade won't get so lucky.
Fortunately, recent entries into the Florida lending industry
have led the industry into being more liberal when approving
loans. For instance, if there are more than 4 late mortgage
payments in a period of 12 months, it calls for a B score,
however if these delays have a plausible explanation the lender
may excuse the default and consider a score of A.
There are companies who specialize in giving loans to high-risk
borrowers and they are known as Sub-Prime lenders. Even though
loans from the Sub-Prime source continue to dominate the
high-risk borrowers segment, the government-sponsored agency,
Fannie Mae too is beginning to acknowledge the potential in this
category. With the availability of more options, a borrower with
bad credit can afford to get choosy and not jump at the first
approval he gets for the fear of not getting another chance.
The Internet is a good place to look for multiple mortgage
options and even for specifically Florida Mortgage Loans,
without the borrower having to reveal his credit status. One may
even go to a mortgage broker in order to locate the best quotes,
but they can be expensive. Ask for reference from friends and
colleagues for a good mortgage lender, since a recommendation is
always assuring.
Once you narrow down your choice, here is a checklist that you
must go through.
1. First analyze your financial status, if you find you have
come out of your past credit blues and can commit more you can
consider an Adjustable Rate Mortgage (ARM). An ARM allows for a
lower rate of interest in the initial years with an option to
refinance at a lower, fixed rate after the first couple of
years. However, if you find yourself financially burdened, a
fixed rate payment would be more appropriate. Search, negotiate
and settle for a rate of interest and for terms and conditions
that suit your financial status.
2. Find out how much penalties are imposed for pre-payment.
Heavy penalties will take away the advantage of any timely
payments that you may be able to make and that may get you a
refinance on better terms in the next few months.
3. Most Sub-Prime lenders exploit the vulnerability of
high-risk borrowers and slap on high closing costs at the end of
the loan. There are more lenders out there willing to do
business than one would have you believe and a little
negotiation can always add to some cost shaving.
4. Avoid paying any upfront or processing fees; the only fee
acceptable should the one you pay for your credit application.
5. Ensure that everything goes on paper in writing, from the
rate of interest, to the closing costs to the pre-payment
penalties and that nothing comes as a surprise after you have
signed the contract.
About the author:
Paul Lerner enjoys writing about a variety of mortgage topics,
including advice on getting a
Florida mortgage quote.
