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 The loan strategy for “less than perfect credits” (taux hypothécaire)

Getting into a bad credit state is easy to do. Getting out is not that easy, but it takes time. And what if you want to apply for a mortgage (taux hypothécaire) and buy a home now?

In judging the file of a home loan applicant, the credit report is a critical factor for a mortgage lender. The lender needs to evaluate the risk associated with each loan application.

Despite all this, there is a home loan strategy for you even if you do have a “less than perfect credit”. It will take place over three to four steps, but in taking these steps, you will reach your goal of eventually getting a mortgage at the lowest interest rate (taux hypothécaire) possible.

Step 1: Get a mortgage

Depending upon your credit history, the first step is to have a three year fixed mortgage with an interest as low as obtainable (even if, in certain cases, you are taking a chance on your mortgage period being too short.)
There are quite a few lenders (over 10) whose mortgage financing criteria is looser than others. There is a solution for almost any credit situation!
There are two major factors that influence the interest rate that you will receive, the biggest being your credit report and your down payment.

Step 2: Correct your credit

During the first two years of your mortgage, you will have the chance to bring your credit back to a good state. It is important to join with a good mortgage financing credit counselor specializing in loans for less than perfect credit. He will be able to advise you as to the steps you should take to repair your credit.

Step 3: Renegotiate your mortgage at the best rate possible.
Now that your credit has repaired, you will find lending institutions who are able to offer you a mortgage at a very good rate (taux hypothecaire). It is a matter of working with the right sort of lender and presenting your case properly. If your credit was extremely damaged, you may have to have an additional step before you can start to get really good rates - taux hypothecaire. (taux hypothécaire)

Advantages:

• Buy a house sooner and be able to take advantage of any upswings in home values. (Read our publication: Will housing prices continue to rise? Forecast for 2006 and 2007”)
• You have now a period of time during which you can work on your credit rating
• You will get much better rates (taux hypothecaire) in the future - taux hypothecaire


Disadvantages:

• You will have a very high interest rate (taux hypothecaire) during the first three years of this plan
• You will have high home loan payments during the first three years of this plan. However, you may be able to keep your payments down by extending the amortization period of the loan, and then you can adjust it to a longer period when you take out your next mortgage.
• You may have to supply additional documentation besides a mortgage note.
• You will have to pay the assessment fees. But if you consult with a financing credit counselor who specializes in poor credit risks you may be able to avoid some of these additional charges.

CAUTION:

Certain mortgage brokers charge extra commission for “difficult” cases. It is normal for the broker to require fees if the financial institution does not pay the fee or if the amount of the mortgage is more than $90,000. In most cases (more than 80% of them) the financial institution pays the fee to the broker.

Never do business with a broker who:

• Requires payment of their fees before having completed the loan financing (at closing)
• Demands very high fees (a commission of 1.8% of the financed amount is normal, with a minimum of $1,500).

Hopefully you have learned something important from all of this. You can really own a home, and own it now, even if you have less than perfect credit. This will help you to take advantage of increasing values in real estate prices. If you take the right steps, and work closely with a good mortgage financing credit counselor who specializes in less than perfect credit, you will have your dream home, and you will eventually have a home loan with the best interest rates(taux hypothèque). Arrange a meeting now with a specialized broker who can help you with less than perfect credit, and find out what you can do to own a home now.

 About the Author

Gregory is an Accredited Mortgage Professional (AMP). To get more information on mortgage rates - taux hypothecaire, please visit: Mortgages - hypothèque

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