After the mortgage crisis and collapse of lenders including Washington Mutual and Lehman Brothers, most lenders have restricted the availablity of loans and tightened the qualifications to get money. Nowhere in the country can one find a bank that is willing to lend money without substantial proof that it will be paid back. People that don’t have perfect credit histories should not despair, however. Bad credit home loans can still be obtained.
Banks have tightened the reigns on handing out loans by making the restrictions even tougher, but the fact is, they don’t just look at your credit history to qualify anyone for a loan. The credit histories of many people have been damaged because of unrealistic prospects at the time they received loans, and banking institutions recognize that unsatisfactory banking practices are partly to blame for this.
If you’re looking for a bad credit home loan, there are lenders that will help you out. The key is knowing that factors such as collateral to secure the loan, employment history, salary, and other bills will be looked at closely when making a determination of eligibility for a loan. Just know that you might not qualify for a low interest-rate loan if your credit is less than perfect.
You’ll also need to have a substantial down payment ready when looking to buy a new home; a lender is more willing to loan money to someone with poor credit if he or she has an investment in the property. The worse one’s credit score is, the more of a down payment will be required by the bank.
Many banking institutions are currently demanding credit counseling as a prerequisite of being qualified to receive bad credit home loans. The hope is that this will provide instruction on how to create a budget that ensures all payments will be made in a timely manner while leaving the customer with enough cash to handle day to day occurrences and necessities.
Credit counselors also help people manage their finances so as not to repeat the poor-credit cycle.
Second mortgages are much more difficult to get, regardless of your credit history, even if it is excellent. Depending on the amount of equity you have on your home, it could either be very hard or very easy to get another loan for your house; if chances are slim, you could just get a refinance loan.
It is not uncommon for people to have a poor credit score these days considering the current economic crisis, loss of jobs and general recession. This situation, along with the stricter criteria that banking institutions are currently using to determine who is and who is not eligible for a loan, can increase the difficulties associated with obtaining a bad credit home loan.
Never stop trying because there are lenders out there willing to go the extra mile but it may take time a little more effort on your part.
