In this day and age, people get bad credit histories for all sorts of unforeseen reasons, apart from the old standard of living above one’s means. I know several people who have got into difficulties through either redundancy, prolonged illness or a car accident, divorce, or in fact one luckless fellow had all three situations arise.

Is it possible to get a loan even with a bad credit mortgage? In today’s mortgage and loan trends, a bad credit mortgage is absolutely possible.

In the past, applying for a loan involves a thorough check up on your credit history and income background. With the world wide web, it is virtually impossible to hide any defaults. If your history is less than perfect or if your income is not that high or both, then your application for a loan is instantly rejected. This practice limits the number of people who can apply for a loan.

Today’s market has adopted more flexible methods. Bad credit mortgages makes it possible for people with low credit scores to still apply for a loan and get approved.

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Pay discount points on a mortgage, and you take a gamble. Plenty of borrowers lost that wager in recent years, according to a pair of economists.Yan Chang and Abdullah Yavas set out to describe consumers’ behavior, not to give advice about whether one should pay discount points. Even so, their research can be boiled down to this: Think hard before you pay discount points, and if you do, don’t hesitate to refinance.

Their research paper, titled, “Do Borrowers Make Rational Choices on Points and Refinancing?” is a chapter of Chang’s doctoral thesis at Penn State University. Chang is a senior economist at mortgage-financing giant Freddie Mac. The study was done independently of her employer, and she speaks for herself. Yavas, an economist and professor of business administration at Penn State, was her thesis adviser.

Chang and Yavas concluded that borrowers tend to pay too many points because they overestimate how long they’ll keep the mortgage. Furthermore, people who pay discount points tend to wait too long to refinance.

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