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Buying A Home With Bad Credit - Fix Your Credit And Avoid Bad Credit Lenders
By: Carrie Reeder
Buying a home is an investment in your future. Even with bad credit you can
start the process of rebuilding your credit and building your net worth through
your home’s equity. By monitoring your credit, researching lenders, and
selecting the right loan, you can purchase a home at reasonable rates.
Fix Your Credit First
Before you start shopping for a mortgage, make sure that your credit report is
accurate. Follow up with the credit monitoring service to make sure all errors
are fixed. You can get a free copy of your report from several companies.
While credit events remain on your report for up to ten years, they cease to be
important after two years. So with a bankruptcy three years ago, it is possible
to qualify for an “A” rated mortgage.
But there are other factors that determine your loan rates, such as your cash
reserves and the size of your down payment. You can qualify for a conventional
loan rates even with a poor credit score.
Avoid The Wrong Kind Of Lenders
There are companies that would take advantage of your credit situation. They
would have you believe that with bad credit, you will have to pay huge closing
costs or rates double or triple of conventional loans to buy a home. Run from
these lenders.
Subprime lenders offer bad credit loans at one to two points higher for each
drop in credit rating. And loan fees are comparable to conventional loans. In
order to find these companies, you need to request loan quotes.
With online lenders, you can receive these loan estimates within minutes. Based
on your personal information, you can get a realistic picture of your loan costs
and mortgage payment. And when financing through a subprime lender, you don’t
have to pay for private mortgage insurance if your down payment is less than
20%.
Keep An Eye On The Future
When negotiating your mortgage, make sure you have the option to refinance in
the future. Ask for no early payment fees, so you won’t have to pay thousands if
you choose to move or refinance.
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View our recommended bad credit mortgage lenders online.
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