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There was a time when buying a home with bad credit
was next to impossible. Fortunately (for people with
bad credit), times have changed.
This change is the result of many factors: increased
competition in the mortgage industry, a wider
variety of loan programs, Internet-based lending,
etc. Some lenders today even specialize in offering
home loans to people with bad credit.
Like I said, times have changed.
But while it has gotten easier to buy a home with
bad credit, you still need a solid plan of action.
Here, then, are your four steps to home buying
success:
Buying a Home with Bad Credit – Four Steps to
Success
1. Get a copy of your credit report.
For starters, you should obtain a copy of your
credit report from all three of the credit agencies:
TransUnion, Experian and Equifax. Review them
closely for errors. The last thing you need are
errors that drag your credit score lower than it
should be.
If you find an error on your report, you can dispute
it online through the credit agency's website:
www.equifax.com * www.transunion.com *
www.experian.com
2. Shop for a lender.
Do plenty of research to find a good lender. Be wary
of predatory lenders who take advantage of people
with bad credit (because they don't have as many
loan options). Get quotes from multiple lenders. Ask
around. Go with trusted names. Do some online
research to identify “red flag” lenders.
Here’s some good news -- through a combination of
government regulation and increased competition in
the mortgage industry, the number of reputable
lenders who offer bad credit mortgage programs
continues to increase.
3. Focus on improving your credit.
Improving your credit score will help you in the
short term (to obtain a loan) and the long term (to
avoid bad credit situations for good!). You can
improve your score by paying bills on time,
especially your mortgage. Don't open any new lines
of credit, and try to pay down your existing lines
of credit. Once you raise your credit score, you'll
be able to refinance the mortgage at a lower
interest rate. And that leads us to step #4.
4. Refinance as soon as possible.
Buying a home with bad credit can actually help you
improve your credit. By holding down a mortgage and
making payments on time, you can eventually elevate
your credit score to the point that you quality for
a lower interest rate.
When that happens, you can refinance the mortgage at
the lower rate, which will in turn lower your
monthly payment and get you back on track. Better
credit, lower mortgage. You can do it!
* Copyright 2006, Brandon Cornett. You may republish
this article (unaltered) provided you keep the
byline and author's note. Please leave hyperlinks
active.
Learn more!
You can learn more about
buying a home with bad credit by visiting
HomeBuyingInstitute.com, the Internet's largest
library of
home buying tips and articles. Visit:
http://www.HomeBuyingInstitute.com
Article Source:
http://EzineArticles.com/?expert=Brandon_Cornett
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