You may have other options in addition to a bad credit mortgage
Request a referral
Request a referral if your regular mortgage broker is unable to assist you. Most lenders operating in this space have connections in the subprime market. They can always refer you to a lender who can provide you with a loan.
Find a bad credit mortgage lender
Buyers with bad credit can almost always obtain bad credit mortgages, but they pay a steep price for it. Rates and terms are extremely high.
It should be a temporary solution
Think of a bad credit mortgage as a temporary situation if you decide to go this route. Keep it short-term.
Wait and save
You might want to wait three years before applying for a mortgage loan if you’ve just completed a short sale because you’ll get a better rate if you wait.
Consider a Federal Housing Administration loan
The Federal Housing Administration secures mortgage loans, ensuring lenders will be paid even if the borrower defaults.
Consider an adjustable-rate mortgage
The interest rate will be lower with an adjustable-rate mortgage (ARM) than with a fixed-rate mortgage, and you’re likely to pay fewer discount points as well. This can help make your mortgage payments manageable, thus reducing your credit risk.
Other options
Work on fixing your credit. Fixing bad credit can take anywhere from a few weeks to a year, but many issues can be resolved in a few months. Paying off credit card debt can boost your score a bit.
Get a free copy of your credit report and review it. Write to the credit bureaus and request corrections if you find an error affecting your score. Then ask the lender to check your credit again using a rapid rescore.
The Federal Housing Administration guidelines allow for cosigners, so consider this option. Perhaps your parents or another relative would be willing to help you avoid a bad credit mortgage.
As of the time of this writing, Elizabeth Weintraub, CalBRE # 00697006, is a broker associate at Lyon Real Estate in Sacramento, California.
Source: https://www.thebalancemoney.com/how-to-find-a-bad-credit-mortgage-1798388
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