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5 Ways to Get Home Loans for People With Bad Credit

admin — Fri, 10 Oct 2008 16:56:07 +0000

Even though the credit market is currently in melt down mode it will come back as confidence is regained. In the past home loans for people with bad credit were pretty easy to come by, but no one is sure what the approval criteria will be in the coming months and years. There are still ways to improve your chances of getting a home loan with bad credit and here are 5.

1^st – Try to find a good deal on a house. If you can find a house that’s priced lower than the appraised value you might be able to get a mortgage easier on that property. The lender will view this as if you have additional down payment money since you will immediately have equity in the home when you purchase it. Don’t assume this will be the case and talk to your lender first if you find a deal like this to be sure it will help you qualify for a mortgage.

2^nd – This probably won’t work as well anymore, but you can try some creative financing options. Lenders have dozens of options when trying to get you a bad credit mortgage, see if they have one that might suit you. Talk with the real estate agent as well and see if the seller is willing to help with the down payment or is willing to carry a second short term mortgage.

3^rd – This is really a no brainer, but you should save more for a down payment. A larger down payment can be a huge help in getting home loans for people with bad credit. It will also help lower your interest rate and if you need to save for an additional 6-12 months you may even improve your credit score enough to get out of the bad credit/high risk category. If you have no down payment or even just 10% to put down it can make a lot of sense financially to keep saving until you can afford 20% at a minimum for the down payment.

4^th – Take some time and improve your credit score. This follows right along with the tip above, but there are ways other than time to improve your credit score. You should take the time to get a copy of your credit report from each of the three credit bureaus and go through them to make sure they are accurate. Many times people are hit with bad credit due to mistakes on their credit reports. Other ways to improve your credit score include making all your payments on time, closing unneeded credit card accounts and avoiding applying for any new loans in the 6 months leading up to your home purchase.

5^th – Take the time to shop around with different lenders offering home loans for people with bad credit. Some mortgage brokers will try to get you to believe that they are the only ones that can get a mortgage for you, but this is rarely if ever true. By simply talking to another mortgage broker you may find that not only can they help you, but they can actually lower your costs. Each mortgage broker has relationships with a variety of lenders and some are more flexible than others in their lending criteria. You should request quotes from a minimum of 3 lenders before making a decision. The good thing is that online mortgage lenders have made it easy to get quotes, even when looking for a bad credit home loan.

If you want to enjoy the benefits of being a home owner then don’t let your bad credit stop you. There are ways to improve your credit score to qualify for a home loan and there are even ways to get home loans for people with bad credit. Be persistent, shop around and keep working towards your goal of home ownership and you can find a way.

Understanding Bad Credit Home Loan

admin — Mon, 06 Oct 2008 19:52:50 +0000

Everyone seems to want to get into their own home, now more than ever, but finding a bank to lend you money when you have bad credit can seem to be an impossible task. A bad credit home loan is always difficult to find, but in these troubled times they are becoming even more difficult to secure. Keep up hope though, because home loans for people with bad credit do exist.

It’s not only those with good credit that can get a mortgage; home loans are available to those with difficult credit histories and from a diversity of economic backgrounds. Those with good credit will still receive the most favorable rates, but bad credit home loans are out there if you’re willing to pay the extra to live your dream of home ownership.

There are several things to consider when you go looking for a mortgage and this applies whether or not you have bad credit. The first thing to think of is the cost and value of the home you’re looking to purchase. The home’s value should be at least equal to the cost of the home. One positive in today’s housing market is that you can find homes that are actually selling for less than they are worth. This immediately gets you equity in the home and is looked upon favorably by the mortgage lender.

The next thing you’ll want to take into consideration is the amount of money you are going to put as a down payment on the loan. I can’t stress enough how important this down payment money is. You should try your hardest to put 20% down as a minimum. This will benefit you in several ways. First off, the lender will be much more likely to finance the home purchase if the down payment is large. Secondly, with a 20% down payment you avoid having to purchase Private Mortgage Insurance or PMI, which can save you hundreds each month. Finally, the more cash you put down on the home purchase the lower your home loan and monthly payments will be.

One final consideration when taking a bad credit home loan is the interest rate. You will receive a higher rate of interest on a bad credit mortgage, so you want to factor this in. The good news is that interest rates seem likely to remain low so you could refinance the mortgage after a couple years, once your credit score has improved. Be careful though because no one can accurately predict what interest rates will do and you could end up locked into the higher rate you get now. If nothing else, be sure to compare mortgage quotes from several lenders to get the lowest rate possible.

You might not think so, but a bad credit home loan is just as competitive as loans for those with good credit. Lenders want your business and this can work to your advantage. Just realize that to keep interest rates lower on a bad credit home loan you’ll need to put down a large percentage of the home cost. If this isn’t possible you either need to accept the higher interest rate or wait and save money until you can boost your down payment. This will work in your favor because not only will you have better rates from the larger down payment, but chances are your credit score will have increased as well.

You’ll find that many companies are willing to extend a home loan to you, even if you have poor credit. They are experienced in working with bad credit borrowers and will do whatever is necessary to get your bad credit home loan approved.

5 Tips About Home Loans for People With Bad Credit

admin — Mon, 08 Sep 2008 18:00:20 +0000

Even with the current mortgage crisis, home loans for people with bad credit are easier than ever to get. Here are 5 tips to improve your chances of getting a bad credit home loan.

Find A Good Deal

Finding a good deal on a property can be a challenge, but if you have bad credit then it could ultimately be the difference between getting a good bad credit home loan or not. The loan officer will view it as if you’re making a larger down payment if the property already has some equity when you buy it. The best way to see if these types of properties will help you to get a bad credit mortgage is to speak with your mortgage broker.

Investigate Creative Financing

There are a variety of creative ways to get home loans for people with bad credit. Adjustable rate mortgages (ARM’s) have been very popular lately and will continue in popularity so long as interest rates don’t begin to rise. Just be aware that if rates do start to rise you could see a significant jump in your monthly payments. Another option is to have the seller help with the financing by putting some money back into the deal as down payment money or by having them carry back a second mortgage on the home. This can get you the extra $10,000 or $20,000 you need to get that mortgage.

Have A Down Payment

OK, you can get a bad credit home loan with 100% financing, but if you can put down even 3-5% you could see a big drop in your interest rate, saving you tens of thousands of dollars over the life of the loan. Do whatever you can to save up for your down payment and make it as large as possible. It might even be wise to wait an additional 3-6 months before getting your home loan, especially if it means the difference between having a down payment or not. In case you don’t have a down payment now, keep in mind that you can always refinance later to get a lower rate.

Shop Around

A lot of mortgage brokers would have you believe that if they can’t get you a loan then no one can. Nothing could be further from the truth. Be persistent and you’ll soon find that even if the 1^st and 2^nd lenders can’t help you, it’s quite possible the next one can. This is one area where online mortgage brokers can be a huge help because they typically have relationships with multiple lenders and will shop around to find you the best deal. Plus, they are quite often used to finding home loans for people with bad credit. It really is nice to be able to compare several loan offers and choose the one that is best for you.

Boost Your Credit Score

One obvious way to improve your chances of getting a bad credit home loan is to increase your credit score. And there are some simple ways to boost your credit score quickly. First, check out the three major credit reporting bureaus to make sure there are no incorrect items on your credit profile. You would be surprised how often this happens. Next, make sure you are making all your payments on time to help your score. If you are looking to buy a house, don’t apply for any new loans or credit cards to keep the number of credit inquiries down. Too many inquires in a short time can hurt your credit score.

Really, if you want to buy a house then don’t let bad credit get in your way. You can get home loans for people with bad credit, it just might take a bit more time and creativity. Apply to several lenders and apply with online mortgage services. And especially look for mortgage services that specialize in home loans for people with bad credit. They will make it much easier to get you into your dream home.