October 10, 2006

Credit Repair Mortgage

Somewhere in Some Town, USA a snobby banker with suspenders is telling someone these words: “I’m sorry you have bad credit and we can’t qualify you for a mortgage”.  The banker’s words pierce like an arrow of despair shot through the heart of a would-be borrower.  The borrower’s countenance changes.  (sad music begins) 

STOP!  (music comes to a scratching halt)

(upbeat music begins)

The Broken Credit Blog enters like Superman to save the day with the Credit Repair Mortgage!

OK, Superman costume and melodrama aside, the role of the Broken Credit Blog has been accurately characterized, not with a flowing red cape and physical appearance inside the bank (although that would be kinda cool), but with saving words appearing on your computer screen.  And for a moment, let’s talk about the role of the banker.  The bank is the first place that comes to mind when most people consider a loan; yet banks turn down more applicants than any other lending institution.  Yes, banks accept your deposits, but when it’s time for a loan they say your credit score is too low.  Something is seriously wrong with this equation.

Anyone can make a mortgage loan to a borrower with an 800 credit score and in a previous article titled “Mortgage Broker Or Direct Lender” we cited empirical evidence proving that mortgage brokers are more competitive (cheaper costs and/or rate) than direct lenders (banks).  The real challenge, however, is in assisting those people who need the most help – borrowers who have been told ‘no’ by the bank.  Enter, the credit repair mortgage loan. 

A credit repair mortgage loan is a temporary loan that can give a borrower sufficient time to improve a credit score through credit repair.  The loan is typically fixed at a low interest rate for two years.  At the end of two years, the interest rate will change to an adjustable rate, but don’t worry; the plan is to refinance the credit repair mortgage loan before any payment change takes place.  In the case of a credit repair mortgage loan refinance, a borrower can use proceeds to consolidate debts and this can have an immediate positive affect on his FICO score.  A credit repair mortgage loan that is used to purchase real estate will report to the credit bureau each and every month and assuming monthly payments are made on time, this too will improve the FICO score.

Therefore, if you find yourself as one whose credit score indicates difficulty in obtaining a conforming loan, then the credit repair mortgage is for you.  Such a loan offers a win-win opportunity – a credit score improvement resulting from the mortgage itself.

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