How to Get a Home Loan With Bad Credit
Are you looking for a loan to finance the purchase of a home but do not have good credit? If so, you are likely to have a difficult time finding a lender. If you have bad credit, majority of mainstream lenders will not accept to offer you a home loan. The risk that the lender will be taking by providing a home loan to a bad credit borrower is high and this is why most of them only opt to finance people with good credit. However, this does not mean you cannot get a home loan when you have bad credit. Some lenders have various requirements that bad credit borrowers must meet to be financed. Moreover, if you know what lenders usually consider when evaluating home loan applications, you can take steps to improve your chances of getting approved. Here are two tips that can help you.
Improve Your Credit Score
When evaluating your financing application, of all the things that lenders check is your credit score. If you have a poor or low credit score, you are not likely to be financed. However, having bad credit is not a sign of your inability to manage your financial matters well. There are difference situations that can leave you with a bad credit history. For example, you may have zero credit rating because you have not borrowed any loans in the past and hence the lender cannot be sure of your ability to pay back the mn home loan financing for challenging credit scores. You may also have bad credit due to factors outside your control, for example undergoing an expensive divorce of medical expenses due to a chronic illness.
If you have a low credit score, take some steps to improve it before applying for a bad credit first time home buyer loan. To begin, get your credit report and find out whether it has any inaccurate information. Check the report for any errors that may be making your score low. Check that all payments you have made in the past have been indicated correctly in the report. Ask for any errors in the report that may be lowering your credit score to be reviewed by the credit bureaus. If any proof is required, for example payment receipts, send copies to the credit bureaus.
Find Bad Credit Lenders
Another option you have is to apply for a home loan from bad credit lenders. The lenders specifically offer home loans to people with poor credit. There are still some requirements you will have to meet to get financing from these lenders. The requirements are however not as strict as that of the main lenders. When applying for a loan, confirm the interest you will pay. Visit http://www.ehow.com/how_4480225_home-loan-bad-credit.html to get more facts.