You may think having bad credit will prevent you from owning a home, but your credit situation does not necessarily have to douse your dream of home ownership. Think about it. In the economic realities of today, many people have been challenged with some bad hits on their credit histories. And all these people still have wishes and desires just as those who have somehow managed to keep their good credit standings. Recognizing this untapped market, lenders have stepped forward and engineered bad credit home loans.
These bad credit home loans do not put as great a stock in your credit standings as regular mortgages. They will be more interested in your debt to income ratio. They will want to know exactly how much you have left over each month after you meet all your necessary obligations such as utilities, life and medical insurances, along with other necessities, and they will be looking to see whether or not you have been responsible enough to have a savings account as well as an emergency fund. Many lenders will also want to have a down payment. This could require a sum of 10-20% of the cost of the loan. You can find bad credit home loans that do not require down payments, but your interest rates will be significantly higher.
If you are really unsure about your qualifications, it would behoove you to get pre-qualified for a home loan. This does not require a commitment to the specific lender from whom you obtain the pre-approval. But it will identify any credit problems, it will reveal the amount of money you can really afford to spend on a house, and it will prove to all lenders that you have a serious interest in becoming a homeowner. This is a good qualification test even for buyers with excellent credit. When a realtor or a home owner asks about your financing, it lends a lot to your deal making conversation when you can say that you are pre-approved for a mortgage. Having a buyer with practically ready cash really gets the pot boiling.
Finding a Bad Credit Home Loan Lender
If you have a long-standing relationship with a bank or credit union, if you have held accounts with them for a considerable amount of time, and especially if you have retirement or investment accounts with them, apply there first, your interest rates will be lower, if you can qualify. If that is not the case, your best bet would be searching for appropriate lenders on the internet. Simply punch the key phrase into your web browser: Bad Credit Home Loan. You will be introduced to a number of lenders willing to offer you a chance at a bad credit home loan. You will even find brokers who will take your preliminary personal and financial information and comprise a list of lenders who would be most likely to approve a bad credit home loan based on the information you have provided.
Other Bad Credit Home Loan Considerations
When you have narrowed the field to four or five lenders who seem like they would work with you, check their credentials. A good place to start would be checking the online listings of the Better Business Bureau. There you will find the businesses rated and feedback from former clients. You might also check personal finance forums to see if you can get more skinny on the lender from old customers. At this point, if possible considering your credit scores and your salary, you may want to ask for a bit more than the cost of the loan to purchase a new car or immediately start some home renovations. With the market broadening for people with poor credit, you might be surprised at some of the deals you may be able to work out.