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Types of Bad Credit Mortgage
 Sharon Hendricks
If you have a bad credit score, chances are that you do not think that you are able to get a mortgage. But the truth is that there is something known as a bad credit mortgage. There are different kinds of mortgages for people with bad credit developed by financial institutions. The names and definitions are going to vary from lender to lender, but below are a few of the different kinds of bad credit mortgage.
Fixed Rate
These kinds of mortgages have an interest rate that will not change during the loan's life. Since lenders face a higher risk when they are lending to people who have bad credit, this rate is usually a few points higher than a rate for someone with good credit.
Adjustable Rate
The interest rates of these mortgages are based on another number. For example, a bank might index the interest rate for a mortgage to the interest rate of the Federal Reserve with regards to interbank lending. This is the interest rate that is charged by banks when they are lending money to another bank. When deciding a rate, there will be a certain number added by to the bank to their index rate.
Hybrid ARMs
These mortgages usually start out as a mortgage that is low interest and fixed rate. This is known as a teaser rate. After so much time goes by, normally 2 or 5 years, the mortgage becomes an ARM at the current adjustable rate of the bank.
It is good to know that even people who have bad credit are able to get mortgages and own a home. If you have bad credit but want to own a home, talk to your bank and see what they can do for you. They just may be able to help you with a bad credit mortgage.
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