very bad credit rating?

Question

my friend wants to get a mortage but has bad credit, shes pays her money to a debt management company which then pay of her creditors a certain amount each month would she be able to get a mortage because of this?
This sistuation was not her fault she got made redundant and could not afford all the repayments whenshe missed payments because of this the interest and the charges just built up

Answer 1

those consolidation companies will ruin your credit even more. she'll be in that program forever and will have bad credit for just as long. it won't help her get a mortgage.

Answer 2

This is tricky and you have to watch the RE market, but it works. Your friend needs to find a property that will appraise for about 20% higher than the asking price. She can then use the additional appraised value of the property as a down payment.

Here’s an example: You find a house that will appraise for 120K. The seller’s asking price is 100K, chances are good the house will have been on the market a while, or there may be cosmetic problems w/ the property, nevertheless the seller has lowered their price. Your mortgage broker will help you find a mortgage for the appraised value. You then take the addn’l 20K and use it as a down payment.

Couple of final comments: FHA financing is usually a little easier, and check to see if there are any first-time home buyer programs in your area. DO NOT acquire more credit or make any large purchases. DO pay down balances on credit cards and keep your bills current. If there is an old debt on the credit report, check w/ the mortgage broker before paying it. If its old, sometimes lenders look past it, but once you make a payment, that old debt becomes a current debt.

Answer 3

First of all, she should take over making the payments directly to her creditors now that she can afford the repayments - particularly if this debt mgt company is charging her a fee for paying to these people on her behalf.

Next, she should have a look at her credit file and put a note on there - she's allowed to do this by law - she should note on the file the situation leading to the bad credit situation and indicate that she is now making payments towards the balance on the account.

All the best.

Answer 4

I recommend that she pay off the debts through the debt management program before applying for a mortgage. If she is serious about homeownership, then see if she can start putting a nominal amount into savings each pay period. If she is at a break even every month (meaning she is saving nothing) then she is in no position to assume the responsibilities and extra costs of homeownership.

It is much better to wait a couple of years until she is ready than to put herself into an even tighter budget. She is on the right track. Hopefully the company that she is currently with can help her with her goal of homeownership.

Answer 5

Usually, if you have a credit score of at least 520, you can get a mortgage. If your score is 580 or more, you can most likely qualify for a no money down mortgage. There are other ways to pay NO money down if your score is below 580, such as an 80/20 loan, where your mortgage is the 80% and then you get a home equity loan at the same time of the remaining 20%. Contact a lender who specializes in bad credit mortgages. Go to Nextag at http://www.nextag.com/serv/main/buyer/mortgages.jsp. They will match you with one or more lenders who can help your friend. Lending tree is also good http://www.lendingtree.com/. They can usually get you pretty good rates, too.

Answer 6

I found a solution that worked for me. It might work for you too.

I had some pretty serious credit problems…some were not my fault and, I guess, a few were. I listened to the so-called “experts” who said they could fix my credit report and I spent money I didn’t have. I didn’t have any luck trying to get my credit report fixed.

I remember paying for the services that these Credit Repair Companies had to offer. The companies told me that they could have negative items removed from my credit reports without any problem, Yeah, right. This did not happen at all. Most of the companies wanted to charge me a set up fee anywhere from $39 to $299 for their services. Not only did they charge this set up fee, most of them also wanted to charge me from $29 to $49 monthly while they “attempted” to repair my credit report. These companies offered no guarantee that their services would actually work and, believe me, they didn’t.

I was about ready to give up when I found a lady who had been through the same thing and who had found a solution. She figured out how get all the negative items removed from her credit report within 3 months without paying anyone a penny. She developed a fast, easy, step-by-step process that she guarantees will work for everyone. She sells the complete plan with all the help and instructions for $47.00.

I know what you are thinking…”another $47 down the drain,” and that’s kind of what I was thinking too. But, I figured that since she offers a 100% money back guarantee I had nothing to lose.

Well, I tried it and it was amazing. I got all of the negative items removed from my credit report and my credit score went from 553 to 715 in only 3 months. All I can say is that it worked great for me. I suggest you check it out. You can always get your money back if it doesn’t work for you. If it works even half as well for you as it did for me you will never even think about asking for a refund.

The information is on this site: http://clean-credit-secrets.com/

Answer 7

Yep. I know that situation!

I got a mortgage through Kensington Mortgages. Yes, the interest is a bit higher than some other lenders but by no means as bad as I thought it would be. At the time I took it out I had mortgage arrears with the previous martgage company which shows that at least they are willing to look on some cases on merit.

Answer 8

I would suggest a mortgage company. Not a bank. Mortgage companies have more options to find the best rates for you. Also, if this is her first home, there are alot of programs out there to help. FHA is a great program for first time or third time buyers. They usually have the best interest rate, and are really good at helping anyone, good or bad credit, and still get a good rate. Check for the local mortgage companies in your area!

Answer 9

She should focus her energy on paying off her debts first and foremost. Then she should work on getting her fico score up which takes time, some valuable tips for doing so can be found at http://finance-girl.blogspot.com/2006/09/raising-your-credit-score-who-doesnt.html She can take the time she is spending raising her fico score to bulk up her down payment. Putting it off sucks but she'll be better off in the long run by doing so because the higher the fico, the lower the interest and just 1% on mortgage interest can add up to thousands.

Answer 10

because the loan is secured on the house she should be able to get one from somewhere, but it will cost her higher interest than you might be paying.

as for the not her fault remark and comments made by some people. I have to agree, it is her fault, almost all lending nowadays can be bought with protection insurance which covers redundancies. so assuming she didnt take it out because it costs more........... enough said

Answer 11

Be very careful, any number of companied will lend, usually at high rates, knowing full well that they can grab the house if it all goes belly up. Look at review sites such as ciao or look in the forums on http://www.moneysavingexpert.com/ for other peoples experiences. Its a big step so make it right.
Main thing is distrust any company that encourages you to tell porkies on the application (which does happen)