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California Bad Credit Mortgage

Sub-Prime Mortgage Loans

If you have a less than stellar credit history, then you need a qualified home mortgage loan consultant to guide you through the process of improving your credit score. The lender will also take into account the borrower’s income and debt ratios, and the borrower’s credit score (also known as the Predictability Factor). It is important to have a home mortgage loan professional in your corner that has a keen eye for solutions to improving credit scores so you can get the best interest rate possible. The team at Providers Financial Mortgage will get you the best mortgage possible even if it is a “California Bad Credit Mortgage.”

Mortgage Loan Interest Rates

Mortgage interest rates are based on current market conditions and the borrower’s ability to pay back the loan. Interest rates associated with various loan programs are broken down into schedules based on credit score ratings. Each mortgage lender will have their own individual guidelines to work by, but over all as the consumer’s credit score goes down, interest rates will go up.

A borrower with an outstanding credit rating will qualify for an A-paper loan. An A-paper loan will have the lowest mortgage interest rates on the market. To quality for it, the borrower has to have a proven track record of using credit sensibly and paying their bills on time.

Refinancing Sub-Prime Mortgage Loans

Consumers with less-than-perfect credit may qualify for a home mortgage loan that is sometimes referred to as “sub-prime”, it can range anywhere from A-minus, B-paper, C-paper or D-paper loans. These are commonly referred to as ‘California bad credit mortgages’.

If you have ever taken out a mortgage loan with a high interest rate because you had a low credit score, then you will really appreciate the value of improving your credit score. Refinancing from a D-paper loan to a B-paper classification can save literally thousands of dollars in financing fees over time, even though the B-paper loan is considered sub-prime.

Improving Your Credit Score

A qualified home mortgage loan consultant will guide you through the process of improving your credit score to refinance your home mortgage loan. First and foremost, the home mortgage loan consultant will want to review the terms of the existing mortgage loan to determine if you have a pre-payment penalty clause written into your contract. A pre-payment penalty clause means that if you sell or refinance the home before the pre-payment penalty expires and you have not paid off 20 percent of the original loan amount, you will have to pay a fee (probably a fee of 3 percent) back to the lender to compensate for the high risk and high costs incurred to provide that financing.

Next, you need to obtain copies of your credit reports, which are available free at (www.annualcreditreport.com) and start working on improving the credit score at least six months prior to the expiration date on your existing pre-payment penalty.

Your home mortgage loan consultant can coach you through some basic strategies to improve your credit score and avoid the California bad credit mortgage. There are basic five rules to follow to improve credit score; Use your credit cards very conservativly, pay off as much debt as possible, do not apply for additional credit cards unless you will benefit from such action, Verify that all negative items you have paid off have been removed from your credit reports, and verify that your good credit history is being reported to all three bureaus. You will also want to dispute any errors that appear on your credit reports and seek to have those removed entirely.

Your Improved Credit Score

When your credit score improves, it is time get rid of that California bad credit mortgage and refinance at a better interest rate. You can repeat this process until you reach A-paper status and secure the best interest rate available. This strategy also works well for first time homebuyers who do not have enough credit history to get an A-paper loan at the time of purchase. The important thing is to work with a mortgage consultant who can give you a roadmap to follow and a strategy for success in building personal wealth.