The Realities of Your Bad Credit and Home Loan Application
As the global economy continues to fight back the effects of the 2008 recession, many people have managed to hold on to the dream of owning a home. Of course, the market has not been kind: Many are still neck deep in credit. To this very day, Americans are trying their best to cope financially even if they now belong to the wagon of consumers with poor credit. Still, this has not stopped consumers from applying for a home loan, even though they know that this type is classified as a home loan with bad credit.
Last year, according to Huffingtonpost , "When the federal Reserve vowed last week to buy up to 40 billion USD worth of home loans each month for the indefinite future, the hope was to finally stimulate a mortgage market on life support for nearly five years."
This projection is being realized and so far, there has been an increase in the sales of pre-owned homes. The only question is: Will the buyers maintain their mortgage payments? For those with poor credit and low income, applying for home loans is almost an impossible endeavour. Most lenders cannot possibly risk dealing with people who have unfavourable credit history.
Thankfully, there are financial institutions that grant a bad credit home loan to anyone who's in dire need of it. A bad credit loan is possible especially based on Huffington's report, "That's why the Federal Reserve has promised to gobble up what would be about three out of every four mortgages. The board hopes to drive down interest rates and give lenders more incentives to lend."
Applying for a Home Loan Even When You Have Bad Credit
These days, lenders are becoming stricter when it comes to approving housing loans. This is one of the effects of the recession that is indeed very crippling. Many loan applicants — even those who have excellent or very good credit — find it difficult to get their home loans approved. One of the main reasons is the new regulation proclaimed by the FHA (Federal Housing Authority).
Despite this, there are possibilities for you when you apply for a bad credit home loan. You can still purchase a home but you should keep in mind that you have to pay a higher interest rate than those with excellent credit. If you went through foreclosure or bankruptcy, you have to wait for four years so that you could pay for better interest rates.
If you qualify for an FHA loan, you could apply two years after your foreclosure. A minimum down payment of 3.5% is achievable. There are other financial institutions that will allow you to apply for a bad credit home loan six months after your bankruptcy but the catch is that you would have to pay 20% to 30% down payment. They will give you a high interest rate and very difficult terms. They could even issue prepayment penalties.
Another option is rent-to-own. This is a popular means to owning a home, especially since many homeowners are still recovering from the recession. The seller could get the price of the house but only after a year or so of payments. The buyer will then have time to rejuvenate his credit.
Owning a home is a big achievement and a great comfort especially if you have a family to think of. Don't lose hope. As long as you have the will to change your financial condition for the better, your poor credit now should never be a permanent hindrance in applying for a home loan.
Last year, according to Huffingtonpost , "When the federal Reserve vowed last week to buy up to 40 billion USD worth of home loans each month for the indefinite future, the hope was to finally stimulate a mortgage market on life support for nearly five years."
This projection is being realized and so far, there has been an increase in the sales of pre-owned homes. The only question is: Will the buyers maintain their mortgage payments? For those with poor credit and low income, applying for home loans is almost an impossible endeavour. Most lenders cannot possibly risk dealing with people who have unfavourable credit history.
Thankfully, there are financial institutions that grant a bad credit home loan to anyone who's in dire need of it. A bad credit loan is possible especially based on Huffington's report, "That's why the Federal Reserve has promised to gobble up what would be about three out of every four mortgages. The board hopes to drive down interest rates and give lenders more incentives to lend."
Applying for a Home Loan Even When You Have Bad Credit
These days, lenders are becoming stricter when it comes to approving housing loans. This is one of the effects of the recession that is indeed very crippling. Many loan applicants — even those who have excellent or very good credit — find it difficult to get their home loans approved. One of the main reasons is the new regulation proclaimed by the FHA (Federal Housing Authority).
Despite this, there are possibilities for you when you apply for a bad credit home loan. You can still purchase a home but you should keep in mind that you have to pay a higher interest rate than those with excellent credit. If you went through foreclosure or bankruptcy, you have to wait for four years so that you could pay for better interest rates.
If you qualify for an FHA loan, you could apply two years after your foreclosure. A minimum down payment of 3.5% is achievable. There are other financial institutions that will allow you to apply for a bad credit home loan six months after your bankruptcy but the catch is that you would have to pay 20% to 30% down payment. They will give you a high interest rate and very difficult terms. They could even issue prepayment penalties.
Another option is rent-to-own. This is a popular means to owning a home, especially since many homeowners are still recovering from the recession. The seller could get the price of the house but only after a year or so of payments. The buyer will then have time to rejuvenate his credit.
Owning a home is a big achievement and a great comfort especially if you have a family to think of. Don't lose hope. As long as you have the will to change your financial condition for the better, your poor credit now should never be a permanent hindrance in applying for a home loan.
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