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Good Help is Available for Bad Credit Home Loans

bad credit home loans

A quintessential sense of security for anybody is to have a house that one can call his own. Purchasing a home and building dreams around living in your own house is indeed an exciting event. It’s also true that it could be a challenge for anybody with a moderate source of income as it demands arranging for finances and checking out various home loan options before calling it a deal. Worse, if the person is suffering a bad credit history and certainly need help.

Now with the myriad choices of home loans preferences for persons with bad credit, they have a reason to smile. All they need is some expert guidance to help assess their financial situation and be able to locate the best home loan option. Here’s how.

As a matter of fact, the real estate market is not so favorable in terms of boom in property prices and real estate appreciation. This trend has forced money lenders to tighten their guidelines of lending loans mortgaging procedures for people with bad credit. This situation notwithstanding, the real market is volatile enough to still provide a range of options to discerning persons. All they need to do is to study the market well enough to count on a good home loan lender who can accept a loan application. In this way, the person with bad credit can still go for the best home loan possible with very reasonable mortgage quotes.

Like in the case of any kind of loan for a person with bad credit, the money lender, before lending any assured sum, will first try to assess the extent of inaccuracies the person has with his credit history. Factors leading to such an assessment include the person’s credit and payment history, the type of credit, new credits (if any) and the length of the delinquent credit history. The lender will then offer a sum (in this case, a home loan) based on the extent of inaccuracies in the credit history.

According to market analysts, a person with bad credit seeking a home loan can expect to pay interest rates anywhere from one percent to three percent higher than someone with good or excellent credit rating. That is, a FICO score should be typically, 700 or higher. If the borrower has a FICO score of at least 600, he/she should be able to get approved for 100 percent of the property value, but needs to check that with a loan officer, they say.

For a good FICO score, careful assessment of the financial situation of the person with bad credit includes checking out if there are ways to improve one’s credit score by repaying smaller credits before borrowing a home loan, assessing if there are any other debts in the near future that would affect the person’s debt-to-income ratio, the security of the person’s current job and income, the person’s general and medical insurance status, and the choice of adjustable rate mortgages (ARMs) so as to improve the credit score with lenders.

An adjustable-rate mortgage or ARM is of advantage particularly to those who have a poor credit history. In this scheme, the borrower has the benefit of starting with a lower introductory interest rate for an average two to three years and the borrower could well use this time period to improve his credit rating. The improved credit rating can then beget him/her a better interest rate. This system of money lenders, although now known to have stricter guidelines, is still prevalent and home loan borrowers with bad credit can still take advantage of the system. But here again, the sole focus of the borrower will have to be looking for opportunities to fix bad credits and not buy time and accumulate more non-payable credits. This will only mean doom to the borrower and therefore the borrower must tread carefully here. So if the borrower is unable to fix his credit in the stipulated time, then there is no point seeking an adjustable rate mortgage. As such, the worst case scenario rate mortgage adjustment is the worst thing to happen to a borrower in distress.

Online databases provide several links and guidelines that help persons with bad credit get home loans. They feature access to a national network of money lenders and help them identify companies that specialize in the type of loan one is looking for and companies that will accept loan applications in one’s area.

Also no home loan lender will offer huge sums of money just like that. Borrowers, especially those with a poor credit history will have to be prepared to answer an almost endless number of questions before he/she finally manages to receive the loan amount and the a maximum loan amount that the person is approved for. The borrower must also make sure to go over the Truth in Lending (TIL) disclosure with your mortgage lender so that disclosing costs are well understood by the borrower. It is very important that in the meantime, the borrower keeps contact with a reliable real estate agent to represent his/her interest in the mortgage procedure.

Shopping for a home loan with bad credit still provides plenty of loan and mortgage options. Take guidance from loan officers and financial experts and the person shall never remain short of owning that dream house.
Published: 2008-01-29
Author: Paawana Poonacha Cariappa

About the author or the publisher
Byline articles for publications,PR content for corporates, syndicated articles for bigwigs, rhymes and short stories for children, and poetry for the like-minded...taking forward over 10 years experience as journalist/writer, presently working as Content Head for a Mumbai-based communications firm. You can view my bylines as "Paawana Poonacha" or "Paawana Poonacha Cariappa".

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