Could you obtain a house for people with a bad credit score?
CThe truth is, getting approved for any home loan can be quite difficult in case you have low credit score. A lot of lending companies have strict credit requirements and when your credit history is unhealthy, the loan application could be immediately rejected.
However, it’s not necessarily impossible to get financed if you possibly can get a subprime lender. Indeed, there are actually lenders out there today who cater to the bad credit market.
Some lending companies offer special loan programs for customers with unfavorable credit ratings.
Is there a catch? Not all bad credit loan offers in the market are legitimate. It is very important to make sure that you are dealing with a reputable and licensed lending company before submitting a mortgage application. You need to be prepared to pay more if you’re going to apply for a bad credit home loan.
Bad credit loans carry much higher interest rates than regular loans. Finding an affordable bad credit mortgage loan deal can be tough so you should be willing to do some research. You must also be prepared to submit a larger down payment as most lenders will require at least 20% payment for bad credit loans. If you can pay higher than 20%, you might be able to negotiate a lower rate.
Why Mortgage is Worth the Wait
Is it possible for you to wait for at least six months or perhaps a year or two before buying a home? If you can delay your plan to buy a home, you will be in much better position to obtain a mortgage loan once your credit has improved. First of all, you will have access to better loan deals. It will also be much easier to get approved if you have good credit.
Another good reason why you should wait until your credit score improves is that you can be financially prepared to handle loan repayment. Give yourself some time to work on credit improvement. You can do this by paying all your debts and staying current with your payments.
Check your credit report after six months to make sure that all your payments has been accurately reported. If you find errors in your report, you should immediately send a letter of dispute to the bureau that issued your report. If negative remarks older than 7 years still appear in your report, you should request the bureau to have those removed from your file. Such errors can badly hurt your credit rating.
If you see a significant progress in your credit score, you should decide whether you want to push through with your plan or give yourself a few more months to further boost your credit rating. After all, an excellent credit score will be your best asset when applying for a home loan. Once you are ready, take the time to evaluate your choices and compare mortgage loan deals.
