So you’re looking to take advantage of the low mortgage rates that are currently available. The only problem is that you just happen to have bad credit. Don’t worry, it’s not the end of the world as there are millions of people just like you. If you have a poor credit rating and are considering taking out a mortgage, you may be able to score points with a lender if you can compensate in other areas. A documentable work history, making a down payment of at least 20%, and having an attractive income to debt ratio are crucial to the success of your loan application. Any of these factors may allow you to negotiate a slightly more favorable interest rate in light of your credit score.

Also remember to choose your lender and your mortgage type-whether VA, FHA, ARM, reverse mortgage, etc., – very carefully. Stay away from any mortgage lender that attempts the following:

·Tries to charge excessive fees on your mortgage. Keep in mind that the average conventional loan does not require more than 1% of the loan’s value in fees.
·Attempts to sell you products or services you didn’t ask for or don’t need (i.e., unnecessary insurance).
·Offers a loan with mandatory arbitration meaning that you are not allowed to take the case to court if your home is threatened.
·Tries to steer you into taking out a larger loan than you can afford such as a 100% or higher mortgage. If the housing market hits a slump like it has in the past three years, you can easily end up owing more than the house is worth.