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Sunday, February 8, 2009

Bad Credit Home Loans

By Gordon McKormick

Many consumers are afraid that due to their bad credit they won't be able to get or qualify for a home loan. Luckily for you there is no absolute answer to this question. Sometimes your situation might be bad enough that you can't get one but in almost every case you have a chance.

How can you get a loan if you have bad credit? You have a bunch of different ways to go about it but here are a few good steps.

To begin with you should go and get your credit history. If you are trying to use a mortgage broker then you can ask them for a credit history. Using a broker will save you money because you can get the report for free.

Now that you have the report you should make sure that it is accurate. A lot of people have bad credit but some of the items are incorrect. The difference between a 500 score and a 600 score can be thousands of dollars.

Once you have your score figured out you can start applying for different types of loans. If you have never bought a new home before you should first apply for a FHA loan. If you can get approved for an FHA you are in luck. You save money on the down payment and on the interest rate.

FHA loans are subsidized by the government for first time home buyers. The great advantage to a FHA loan is that your rate is cheap and your down payment is low.

If you don't qualify for a FHA loan you still have options. Depending upon overall economic conditions some banks can be very lax and they don't require a lot. Other times they will just charge you a high interest rate.

Your last good option is to just save a lot of money. If you are willing to put 20% down then you have a really good chance to qualify for a home loan even if your credit is bad.

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