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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.
There's no place like home, unless you have a mortgage with ridiculous terms that make paying it painful. Here's a recipe for unhappy homeownership:
- 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.