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There was a time that seems like decades ago when
people with less than pristine credit were not able
to get home loans. At that time people with bad
credit were all but assured that their dreams of
homeownership would never come to fruition. Luckily,
for many people, those days are long gone.
Homeownership is possible for people with bad credit
and no credit history at all thanks in large part to
a multitude of loan packages made available by
countless lenders. Good people with bad credit can
now get approved for mortgages and despite what you
may have heard from a well intended but misinformed
friend or family members, these loans can be at very
competitive rates.
In today's economy if mortgages were made available
only to people with pristine credit, the real estate
market would collapse. There are simply not enough
people in America today with pristine credit.
Lenders were forced to create packages available for
people with bankruptcies, bad credit histories or no
credit histories at all. To remain competitive
lenders had to create these packages and you can be
the beneficiary of them.
Though it is true that some packages remain
available only to those with excellent or very good
credit, there are just as many, if not more packages
that are made available to people with mediocre or
poor credit, including past bankruptcy. These
packages are available at all different interest
rates and nuances that allow greater flexibility in
coming up with a package that makes sense for you.
Lenders are now looking at an overall loan
application including income, credit history,
appraised value of the home and selling price. They
will examine how recent or far back your credit
problems occurred. They will consider the instant
equity in the home (appraised value versus selling
price), as well as your income and ability to pay
your monthly payments. When looking at income they
can, if you want them to, consider all forms of
income.
The more recent the bad credit in your credit
reports are the tougher it may be to get approved
for some packages, but it is still not impossible.
You will want to have a good sense of what is in
your credit report so you are prepared to correct
any problems in the report. There are countless
credit repair programs available that will help you
improve your credit score.
Past bankruptcies are not necessarily a death
sentence for homeownership and depending on how long
ago they occurred they may not hinder the mortgage
process at all for you. It is always important to
keep copies of your discharge papers and a complete
record of your bankruptcy. Your lender may require
copies of some of the documentation. They will want
to see exactly what was discharged. If there was a
mortgage that was discharged in bankruptcy it will
impact which mortgage packages are made available to
you, but even then there may be mortgage packages
that you can still be approved for.
It seems all too often that people with bad credit
feel that they are unable to get beyond their past.
Owning a home and showing on-time mortgage payments
is a good way to improve your overall credit
portfolio. If you are approved for a mortgage and
show payments being made on time this will go along
way towards improving your credit scores and
improving your overall financial picture.
When applying for home loans, do not try to hide
your credit history, invariably they will uncover
any and all skeletons you hoped were in your credit
closet. You are much better off being open and
honest with your mortgage lender. A good mortgage
lender will know exactly what packages they can look
into for you if you give them an honest and
realistic picture of your credit history and other
financial matters. Tell them what is wrong in your
credit report and can be fixed, what is accurate and
cannot be fixed and what you are unsure about. Some
lenders will allow an explanation, including proof,
of incorrect items on your credit report and look
beyond them while evaluating your loan. Dishonesty,
however, can hurt you in the long run so be
completely honest with the lending institution.
You can also consider using a co-signer for the loan
who has a stronger credit history in some cases. You
may be able to have them cosign the loan for a
period of time and then you can refinance the loan
in your name only once your credit history has been
improved. This has become more common with first
time homebuyers. The refinance market is strong and
there will always be the opportunity to do just
that.
The simple fact of the matter is that there are
countless loan packages available to people with bad
credit or no credit history. These loan packages can
help you whether you have a large down payment, a
small down payment or no down payment at all.
Speaking to a mortgage lender or network of lenders
that have many packages at their disposal will help
you begin to realize your dreams of homeownership
and put you on a path towards a much brighter
financial picture.
About the author:
Ethan Hunter is the author of many credit related
articles. If you are looking for help with Home
Loans or any type of credit issue please visit us at
http://www.homeloanave.com
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