Mortgage Rates For Borrowers With Less-Than-Stellar Credit

• Author: Jacob Greene
• Posted: 2024-11-11

Mortgage rates for borrowers with less-than-stellar credit can be high, but they can still be affordable. These borrowers may have missed payments, high debt, negative marks like bankruptcy, and accounts in collections. Having lower credit scores makes borrowers look like more of a risk to lenders. In some cases, lenders may even raise the rates to compensate for a poor credit score.

Traditionally, mortgage lenders were willing to approve borrowers with less-than-stellar credit, provided their income was modest and their bank account was fat. But as the financial crisis has taken its toll on the economy, lenders are turning away many less-than-stellar borrowers. The higher interest rate means higher monthly mortgage payments, which means a greater risk of loan rejection.

Lenders prefer people with excellent credit scores because they have been responsible with their money and debts over time. These borrowers are more likely to repay their debts than those with less-than-stellar credit. That's why they usually have lower interest rates for them. In exchange, these borrowers are expected to make payments on time. Borrowers with less-than-stellar credit and mortgage rates are at an all-time high.