What is A Bad Credit Home Loans
A “bad credit home loan” is a loan that one can get despite having a bad credit rating. Many lenders offer programs for bad credit home loans knowing full well that the loan that they are making is fully secure as a mortgage against your home.
Trying to obtain a bad credit home loan is an opportunity for those who have a bad credit rating and would like to start back on the road to obtaining a healthy credit rating by building back their credit. Once your credit rating returns you can more easily replace a bad credit home loan, lower your monthly payments by refinancing and even consolidate other debt and roll it into your mortgage to have one lower payment. Consolidating multiple debts under your mortgage that are spread out over a longer period of time can help lower your monthly payments. Moreover, making regular payments on your new mortgage for 6months to a year will reflect in a big way on your credit report.
Some of the more popular options available for bad credit home loans are cash out mortgage refinancing and obtaining a “second” or home equity loan. Both of these options allow you to cash in on the equity already paid into your home or the increase in value over time and use the additional equity to help get yourself out of debt. It’s best to discuss your situation with a mortgage professional to help you with your specific situation and what options are available to you. Cambridge Home Loan can help you with your options as well as some Free credit repair advice. There are many instances where homeowners do not check their credit report on a regular basis and don’t have any idea what is on their report or how important their credit report is to lenders.
Please try to keep the following in mind when applying for a bad credit home loan.
a. Speak with a mortgage professional about the various programs that are available to someone with bad credit. Let them know your situation and what you are trying to accomplish. At the end of the day there is no fooling the money and if you want to end up with the best loan disclose everything to your mortgage professional. He is there to help.
b. To get an accurate quote that a lender will be able to quote on you will need to disclose the good, the bad and the ugly. It will come out during the banks underwriting and by providing it up front your mortgage broker will have more time to find the best rates and terms for you.
c. Try and get to total of all of the bad credit home loan costs that you will be responsible for i.e. including and PMI insurance, closing fees, application fees, any additional charges, interest charged, amortization table and any additional loan fees.
d. After you apply for your loan do not forget to keep a copy of all records received from the lender and to follow up weekly. You may have to be a little more patient than someone applying for a conventional loan. A bad credit is typically riskier for the lender and takes more time for them to underwrite.
e. After you close on your bad credit home loan, make consistent payment on time and plan to refinance as soon as possible. Typically by the end of the first or second year your credit should be back in shape and you should qualify for a conventional rate loan that will save you the most money.
There is nothing wrong with obtaining a bad credit home loan if it helps you accomplish your goals of home homeownership, helps you start to build equity and get your credit back in shape. Once your financial house