If you have poor credit, you should get a copy of your credit report to make sure there are no inaccuracies. Sometimes accounts that have gone to collections and have been paid of or have a negotiated settlement will still show a balance due on your credit report. Getting errors like this corrected will improve your credit score.

Often times people with poor credit can still get mortgages. These mortgages are often geared towards paying off debt. Often after getting a mortgage with poor credit the borrowers credit score increases. This places them in better position for their next loan.

A Poor Credit mortgage is also called a Sub-Prime Mortgage Loan.

Many loans that are designed for people with poor credit are designed with the idea of working to fix the poor credit up within a year or 2 so that you are able to refinance again within a couple of years to obtain much better financing. With this in mind that is why it is very common and probably in your best interest to obtain a short term 2 or 3 year fixed rate loan (commonly referred to as a 2/28 or a 3/27) instead of a 30 year fixed rate loan. A 2/28 is a 2 year fixed rate that is adjustable for the next 28 years and a 3/27 is the same except 3 years fixed instead of 2. The rate on these ARM (adjustable rate mortgage) loans will be considerably lower than on a 30 year fixed rate.

Home buyers with bad credit history should be realistic when shopping for a mortgage. They should not expect to get the lowest interest rates advertised on local newspapers. Depending on how bad is the credit profile, the size of downpayment, Debt-to-Income ratio, property type, and other underwriting factors, home buyers with bad credit history usually have interest rates 1.5% to 2.5% higher than that of the lowest conforming loans.

There are many poor credit mortgage programs. Also, your mortgage broker can get you into a credit repair program and refinance you down the road to give you better terms.

Regardless of your credit status, home ownership will give the opportunity to accrue equity and establish new credit with clean history.

Understanding that the mortgage you will qualify for will not be as good as someone with great credit. You should always look at the long term benefits as getting a mortgage now will put you on the path to a better financial future in terms of your credit and credit score. Maintaining a perfect payment history will help you refinance the mortgage into a better term mortgage down the road.

Poor credit borrowers can also expect to pay more in up front fees. This is do to the fact that your file will require alot more attention and work from the mortgage broker in order for it to close.