Following the collapse of financial giants like Washington Mutual and Lehman Brothers, many in the world of finance have tightened the purse strings dramatically. Nowhere in the country can one find a bank that is willing to lend money without substantial proof that it will be paid back. Though you have poor credit, you shouldn’t just not try to get a loan. It is still possible to obtain bad credit home loans.
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While it may be much harder to get a loan than it was before, there are more factors than just good credit that play into getting a home loan, which you can take advantage of. One reason is they realize that poor banking practices in recent years have led to many people having bad credit due to unrealistic expectations at the time loans were made in the past.
But there are lenders willing to take the risk of lending to you, even if your credit is poor. The key is knowing that factors such as collateral to secure the loan, employment history, salary, and other bills will be looked at closely when making a determination of eligibility for a loan. Just know that you might not qualify for a low interest-rate loan if your credit is less than perfect.
You’ll also need to have a substantial down payment ready when looking to buy a new home; a lender is more willing to loan money to someone with poor credit if he or she has an investment in the property. And the lower the credit score, the more money you’ll have to have on hand.
Many banking institutions are currently demanding credit counseling as a prerequisite of being qualified to receive bad credit home loans. Basically, by attending credit counseling, you will know how to better manage your money, making you more likely to make your payments, and as such the bank will view you as less of a risk than you were before.
Also, credit counselors will offer guidance to people so that they will not overextend themselves and have future difficulties with their credit histories.
One thing that will be more difficult to obtain, whether one has bad credit or an excellent rating, is a second mortgage. If you have equity in your home, but still owe a great deal, it is easier to refinance your existing loan rather than attempt to borrow against the equity.
Now that the economy is facing some troublesome times, and the unemployment rate is skyrocketing, there are plenty of people out there who need money but don’t have the credit to get it. Also, because of the crisis, banks are viewing more and more people as higher risks, and tighting their belts, refusing to lend to anyone but the most trustworthy borrowers, making it hard to get a bad credit home loan. Don’t surrender; there are lenders willing to work with you if you take the time to find them and be willing to abide by their rules.
John is experienced in the field of bad credit home loans.
