In these terrible times there are many people in America who are having bad credit problems. Loans, mortgages and credit cards are no longer easy to get, however people still need easy access to cash. If you’re ready to purchase a home you know how true this is, so how can you go about getting a mortgage for bad credit?

While everyone is looking for an answer to this question it looks like there are no easy answers and the situation continues to get worse rather than better. Home values continue to decline each month and there’s nothing any individual can do about this. Even the government is involved now and they are unable also to stop the decline in home prices and the lack of mortgage availability. Banks these days are all in a tough spot and loans are nearly impossible to get.

One new emerging solution when purchasing real estate is the use of hard money. This is a group of investors willing to lend money to individuals or businesses just like a bank would. They know that you may have had past problems with bad credit, but they are still willing to step up and help you get a loan to purchase a home.

These private investor groups are made up of high net worth individuals and they are looking for a good place to invest their money. The way they determine a good investment is by protecting themselves with equity. So, the more equity you can show the more likely that you would be considered a good investment by one of these groups. Because of the equity requirement a good credit score is not too important to these groups and you can get a mortgage for bad credit through them.

These private investment groups are well aware of the problems of the average individual in today’s economy and they are profiting from it. They do require a minimum of 65% equity of the loan value so if you’re trying to purchase real estate with a loan through them they will typically ask for a down payment of at least 35%.

The terms of these loans are also fairly hard, and the hard money investors will normally amortize the mortgage over 2 years. There are cases where they will extend this period, but in these cases more points will need to be paid on the loan. When you take a loan like this your goal will be to refinance within two years and the assumption is that the economy will have improved by that time.

All of these investment groups work differently and you’ll need to do your research well to determine the terms and conditions of each lender. If you’re trying to get an equity loan to do home improvement or construction you’ll find that some investors won’t consider equity loans, but some will. Expect to pay points, have a high interest rate and a short amortization period from hard money lenders and you won’t run into any surprises. This may not be the ideal way to get a mortgage, but in today’s trying times this may be the only way to get a mortgage for bad credit.

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