Mortgage for Bad Credit

admin — Mon, 29 Sep 2008 19:41:32 +0000

The American dream is to own your own home and why not. A home is solid asset that (usually) will only increase in value with time. If you have had bad financial situations hit you in the past you know that getting a mortgage for bad credit can be almost impossible. Everywhere you turn seems to point to denial after denial. Of course it doesn’t need to be this way and while your bad credit score can impact your ability to get a mortgage, lenders look at other factors as well. So, by improving the overall picture you may be able to get approved next time you apply for a mortgage for bad credit.

Lenders will naturally consider your credit score, but other factors they look at include your income, your expenses, the value of the home you’re trying to buy, your current debt load and the down payment amount you are offering. If you’ve been hit with bad credit then some of these other factors may actually help you to get approved for a home loan.

First of all, start saving your money. The bigger your down payment the more likely you are to get approved for a bad credit mortgage. In fact, as you’re saving you can also work on improving your credit score so by the time you have a suitable down payment your credit score may have increased dramatically and you may not even be looking at a mortgage for bad credit any longer. A large down payment means a lower loan amount and decreased risk for the lender which equals higher approval rates and lower interest rates for you. When you save more money for a down payment it’s a win-win-win situation for you.

Another way to help your approval is by getting recommendation letters from your current landlord. If you rent your ongoing rent payments will not be included in your credit score, but a letter from your landlord stating you have been on time with payments for the past two years could be enough to tip the scales in your favor. You should also consider getting a credit card and using it if you don’t already have one. By using the card and paying it off regularly and on time you’ll help boost your credit score.

If you’re a first time buyer that helps too. Many lenders have special programs for first time house buyers that can get you a mortgage even if you wouldn’t normally be approved because of bad credit. There are also loans available for first time home buyers with little or no credit history. If you’re considering buying your first home you should take the time to speak with a mortgage broker and find out all you can about loans for first time buyers.

By getting prepared for the step into a mortgage you can greatly improve your chances of being approved and also of getting a lower interest rate. If you have little to no credit history you can make up for this by showing stability in other areas. Lenders will look for a checking account, employment and residence at the same place for the past two years. If you can show all three you’re in the right direction for having your mortgage approved.

Those of you with past credit issues and current bad credit may have a harder time as you present a risk to the banks and mortgage companies that approve the loans. Do all you can to clear any negative items on your credit report, improve your credit score and raise your savings to have a bigger down payment. All of these things combined can make the difference between getting declined or approved for a mortgage for bad credit.

A Primer for First Time Home Loans

admin — Tue, 23 Sep 2008 17:54:33 +0000

What are Home Loans?

Home loans are used to finance a home purchase and are also known as mortgages. There are many varieties and they can be tailored to suit the needs of the home buyer.

What is a mortgage?

A mortgage is quite simply a loan taken to buy a home. There are many types of mortgages and these loans are also called secured loans because the home itself serves as collateral and “secures” the loan. Most mortgages require you to put some amount of money on the home as a down payment and this amount can vary. Typical down payment amounts are 10-20% of the home value, but mortgages are available for $0 down, especially for first time home buyers.

Where to find Home Loans?

There are many lenders that offer home loans, from banks to credit unions and you can even get mortgages online now. If you’re looking for first time home loans you may want to start with the bank where you have your checking and/or savings accounts as they may offer discounts for established customers. Online mortgage brokers are also a good place to look as it is easy to find them and also easy to get a quote.

Determining eligibility for a Home Loan?

There are several factors that a lender will use to determine your eligibility for a first time home loan, however the most important of these is your credit score. Your credit score is the number assigned to your credit rating by the three big credit reporting agencies, Trans Union, Experian and Equifax, and the higher this number is the better. Your credit score is influenced by the number of loans you have and your repayment history among other things.

How are home loans paid?

A home loan is usually a very long term commitment, the typical mortgage is taken out for 30 years. This is because the loan amounts are so large that shorter terms would make the monthly payments unbearable for most working people. Home loans are usually paid on a monthly schedule although it is possible to get mortgages that are paid every two weeks. The benefit here is that the borrower ends up paying less interest with this type of repayment schedule and in many cases can pay the home loan off in as little as 10 years.

When should I get a Home Loan?

Basically, you’ll need a first time home loan whenever you decide to purchase a home. The best time to do this is really up to you. Can you afford the down payment and monthly obligation? Are you planning on staying in the same area for longer than the next 5 years? These are both important questions that can affect whether or not the time is right for you to get a first time home loan.

You also want to consider the current interest rates being charged. If rates are high it may make more sense for you to wait. Also think about your credit score. If your score is low it can also make sense to wait. The benefit of waiting is you can save more money for the down payment and can also get a decreased interest rate, saving you money in the long run. First time home loans are typically easy to get, even for those with poor credit and the biggest benefit is that you become a home owner.

Home Mortgage and Refinancing » first time home buyers

Mortgage for Bad Credit

A Primer for First Time Home Loans