At one point in time, having bad credit made it extremely difficult to get
a home loan. Fortunately, things have changed, and many people
with less than perfect credit are obtaining home loans with
decent rates. Getting a home loan with bad credit is doable.
However, you must be willing to seek out lenders that offer
bad credit loans.
Reasons to Consider Purchasing a New Home
Homeownership is beneficial for several reasons. Individuals
who rent their homes or apartments are literally throwing
away money. If your rent is $500 a month, in a year’s time
you would have spent $6000. Instead of making your landlord
rich, this money could go towards paying a mortgage and building
equity
Furthermore, if you own a home, you are eligible for certain
tax deductions. Owning a home also makes it possible to get
extra cash by tapping into your home’s equity. Home equity
loans and lines of credit are perfect for home improvements,
unexpected expenses, debt consolidation, etc.
Choosing a Lender for a Bad Credit Mortgage
Be aware that not all lenders will offer loans to people
with bad credit. Although many mortgage companies have started
offering sub prime mortgage loans, some lenders will not approve
an application if your credit score falls short of their minimum
requirements.
Because credit blemishes are common, and the average household
carries a large credit card balance, many lenders have begun
offering loan programs for all credit types. These loans also
benefit those unable to save for a down payment or closing
fees.
Tips for Getting Approved for a Bad Credit Mortgage
If you are hoping to get approved for a home loan with bad
credit, you may qualify for a better rate if you fix credit
problems beforehand. Improving your score by as little as
ten points may make you eligible for a slightly lower rate.
Additionally, get multiple quotes by using a mortgage broker.
Brokers can help you locate many sub prime lenders that offer
bad credit mortgages. When completing a quote request, choose
a broker that does not review credit. If your credit is evaluated
by four different lenders, it may decrease your score.
Instead, provide an accurate credit description. It may help
to check your personal credit report before applying. Once
you obtain at least four offers from different mortgage lenders,
compare the quotes, and pick a lender. Complete the loan process
by submitting an official loan application. The chosen lender
will check your credit before finalizing the loan.
View our recommended lenders for Bad Credit Mortgage loans.
Carrie Reeder owns ABC Loan Guide, an online resource with
information about Mortgage Refinancing Online and Home Equity
Line of Credit lenders.
