Can Somebody with Bad Credit Get a Mortgage

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Can Somebody with Bad Credit Get a Mortgage?

The short answer is yes. But expect to pay more for a mortgage loan than those without bad credit. Sometimes much more.

To understand why, it helps to understand why lenders give loans, and the reason is simple: to make money from the interest. If loans are not paid back, not only do they not make money, but they also have less with which to lend to others.

Of course, having a low credit score is an indication of this kind of risk. However, like with any kind of investing or even gambling, higher risk potentially equals a higher return. In such, this is why there are companies that want to give loans to people with poor credit.

As mentioned, lenders make money by charging interest—and to offset expected losses by lending to borrowers with bad credit reports, they are likely to charger higher rates.

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