The number of people living with bad credit in this country has skyrocketed in the last five years as the economy has collapsed. This has made it very difficult to find home loans for people with bad credit. The collapse of the high risk mortgage industry has led many people to believe that once their credit has been damaged, they are no longer going to be able to secure a loan to buy a house. This is not the case and if you know what to do, you can find a lender that will help you buy that new home.
While there was a period during which those with bad credit were unable to borrow money for any reason, this time has finally started to pass. Banks and finance companies are realizing that as many as 70% of all Americans now have credit problems. At the same time they know that the only way they can make money is by lending it out and collecting the interest. If they are not making loans, they are not making money.
While you can get home loans for people with bad credit, you must realize that there are some limits in place. These limits are put in place to protect both you and the bank, by ensuring that you can actually afford the payments on your loan. The first thing they are likely to do is put a cap on the amount of money they are willing to lend you, no matter what your income level is like.
You are going to have to be prepared to pay a higher interest rate for your home loan. The worse your credit rating is the more interest the bank or financial institution is going to charge you. The low mortgage rates today that are advertised are only for people with excellent credit, all others pay higher rates. This is their way of protecting themselves as they try and recover as much of the original loan amount in the early part of the loan in case you should default. Consider it a penalty for not taking care of your credit rating the way you should have.
Finally, when it comes to financiang bad credit home loans, no lender is going to even be willing to talk to you if you don't have a sizeable down payment. In many cases this applies even if you have good credit. The typical down payment is at least ten percent and the more you have, the more likely you are to be able to qualify for the loan you need to buy a new home for you and your family. Persistence pays off, so shop around for the best rates to keep you loan affordable.
Author Resource:
Oliver Silverstones makes it easy for the first time buyer to find all the state and local first time buyer programs. He keeps a daily update of the lowest mortgage rates today , as well as providing great advice to avoid most first home buyer headaches.
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