Making A Profit On Bad Credit

By Christopher Zoukis

Anytime there’s a financial crisis is a good time to buy a home or re-finance a home.  Why?  Because nothing has more value than ‘real assets.’  And there isn’t anything more real than owning a home or land.  According to the old adage, God is done making land.  Image courtesy

At the present time, real estate is as cheap as it has been in thirty or forty years.  Now is a good time to buy a new home or refinance your existing mortgage.  Even if you have bad credit, programs exist to make mortgages affordable.  If you have a job and a monthly income, you can qualify for a mortgage.

Mortgage rates are as low as they have ever been.  Thirty-year fixed-rate mortgages are below 3 percent, and are unlikely to go much lower.  Simultaneously, the cost of houses has dropped 20 to 50 percent, depending on geographical location.  So it’s a win-win situation.  If the economy continues to improve, the price of houses will go up, which means added equity.  If king dollar starts to lose value, lots of investors will move the money they now have in financial investments into houses, commercial real estate, and land.  This movement will support rising real estate values.

Many mortgage companies have established programs that allow you to refinance your home without perfect credit.  If you have remained current on your mortgage, you can qualify for a lower mortgage rate.  A lower mortgage rate will not only save you money, but will allow you to reduce your other debts, which will improve your credit.

Option ARMs, interest-only loans, and negative amortization ARMs allow for lower monthly payments.  When the balance owed builds to a specific point, automatic reset is triggered, which keeps the payments lower.  Home builders use these programs to get buyers into homes, while mortgage companies use the same programs to refinance existing loans.  And since it seems unlikely that the Federal Reserve will raise interest rates in the foreseeable future, these programs are a good long-term strategy.  You borrow as much as your credit will allow, and then pay back the loan in ever-cheaper dollars.  This is an effective method of leveraging your mortgage to make money.

Moreover, if you shop around, even with bad credit, you can find fixed-rate mortgages, especially since interest rates keep falling.  Because of the millions of homes flooding the market, banks and mortgage companies are open to working with homeowners. 

When shopping around for a company to work with, don’t be in a hurry.  Do due diligence.  Ask friends and associates for recommendations.  Make sure the company you decide to work with is honest and reliable.