Great credit is the luxury that only 30-40% of all Americans enjoy. The rest don’t have 750 scores and at one point or another failed to make a timely payment, or ended up in a collection, or even went as far as filed for bankruptcy protection, all of these events recorded on their credit reports and made them “higher risk” borrowers in the eyes of the lenders. If you are one of these borrowers, don’t despare: lenders don’t want to loose you as paying clients, just want to price your loan accordingly, so they created a wide variety of choices that help you get back on track with your credit while still enjoying relatively low rates. If you are serious about fixing your credit (SEE our separate section on "CREDIT SCORING"), you are most likely to stay in the loan for about 1 to 2 years. If you stay on track with all your credit obligations, especially with your mortgage payments, you should be able to qualify for a better rate mortgage when you refi.
BEST LOAN CHOICES:
2-3 year Hybrid ARM loans, including Interest Only, negAm or "Cash Flow" option ARMS`s, HELOC`s,
hard money loans (if you are facing a foreclosure). Use prepayment wisely: if you are not going
to refi or sell the house in two years, take a two year hard prepay option to lower your interest
and payments.