Bad credit can make you a miserable mortgage payer

By Scripps Howard News Service | Published: 11/01/2007

If your credit is weak, you may be wiser to get yourself in a better financial position before buying a house.

• Get a mortgage with an interest rate of 10.5 percent or more.
  
• Find out the mortgage has a pre-payment penalty, meaning that if you refinance to lower your payments you'll have to pay a hefty fee.
  
• Have a financial situation so shaky you're not sure how you'll make the mortgage payment for the rest of the year.

Unfortunately, that's the sort of mortgage a lot people with bad credit end up getting. They end up in financial hot water instead of with a good investment.

So what gets you classified as having bad credit?

• You've made a mortgage payment 60 days late.
  
• You've declared bankruptcy.
  
• You've been through foreclosure in the past three years.
  
• You've had a car repossessed.
  
• You've had a bill referred to a collection agency.
  
• Your credit cards are maxed out.
  
• You get paid in cash.
  
• You have no credit cards.

If your credit is weak, you may be wiser to get yourself in a better financial position before buying a house. It's better to wait and get a mortgage with better terms than buy now and end up with house payments you can't make and the foreclosure boys knocking on your door.

GO TO: Part 1: Evaluate Your Life and Finances

GO TO: Part 2: Shop for a Loan

GO TO: Part 3: Find a House

GO TO: Part 4: Close the Deal

GO TO: First-Time Homebuyer's Guide

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