A big question that some people face has to do with the possibility of obtaining a home loan when their credit isn’t good. As it stands, yes it is possible however there are some things to take a serious look at. The first question asked will be, “How much cash do you have?” and then you need to know the actual property value of the home that you’re interested in and if you can make the interest payments.
What about the down payment?
If you’re wondering “How much can I borrow?” then you need to take a good look at the money you have for a down payment. One of the best ways to put a lender’s mind at ease is to demonstrate your commitment to the home purchase. After all, no lender wants to take on the entire cost of the home – especially when bad credit is involved. Saving up for a good down payment will also make a difference when it comes to your monthly payments, which is also something that the lender will be taking a look at. In many cases, a sizable down payment may be the only reason why a lender will discuss financing with you. When purchasing a home, the typical down payment is 10% of the entire value of the house and property. Usually, with a bad credit loan, the lender would require at least 20%. This percentage can vary, so it’s a good idea to research the company that you wish to borrow from or speak to a mortgage broker.
How can the actual value of the property be determined?
To be comfortable with the property price you should make a personal inspection along with receiving an appraisal from an agent that you know. You will also gain some extra trust from the lender when they see that you have taken this step. A good move is to ask the lender if they, themselves, can suggest a trusted appraiser. Once you have received the appraisal, then you’re ready to present your offer to the property owner or the real estate agent. All of these steps can impress the lender regarding your care and sincerity regarding your loan application.
What will the interest rate be?
There are a number of lenders that will loan to those with poor credit and their interest rates will vary. You should be aware that even a one point difference in the interest rate can mean a difference of thousands of dollars when you take the entire life of the loan into consideration. Your research must include the expected amount of down payment plus terms of repayment and interest rates. All of these can vary considerably from one lender to another. When it comes to the down payment, your goal should be to meet or, preferably, exceed the amount that is required.
As a final suggestion, it’s a very good idea to use the Internet as a resource. When you enter the words “bad credit home loan” into a search engine, you’ll be surprised at the number of lenders that you’ll pull up. You can even find a mortgage broker who will assist you by presenting multiple options for a poor credit home loan. This will make securing your bad credit home loan, with your substantial down payment, far easier than you may have originally anticipated.
See Also:
- 2 Types of Mortgage Insurance
- First Time Home Buyers Need Budgeting Skills
- 3 Tips for Saving Money on Your First Mortgage
- How Much House Can You Buy?
- Is a House Ever a Good Investment?
Advice from Amazon for Securing a Bad Credit Loan:
- Hidden Credit Repair Secrets: 2nd Edition
- Home Loans For People With Bad Credit
- Homebuyers Beware: Who¿s Ripping You Off Now?–What You Must Know About the New Rules of Mortgage and Credit
- 5 Ways To Boost Your Credit Score 100 Points!
About the Author:
Linda Ramos is a freelance writer and finance author who spends her time writing and performing investigative research pertaining to a variety of home and business investment and financial topics. As an experienced financial editor and real estate advisor and writer, her desire is to aid her readers when it comes to better understanding the many issues relating to financial investments, home mortgage and broker options for home and business investors.