If you were wondering if poor credit home loans still exist, then you will want to read this article. Specifically, we will discuss what has happened to bad credit mortgages, where you can go to get a mortgage if your credit is bad, and the best things you can do to improve your chances of qualification. After reading this article, you should have a good understanding of where bad credit loans are today.
A few years ago, if you wanted to buy a home but did not have good credit, you had many options. Mortgage professionals used to joke that if you could fog a mirror you could get a mortgage! There were sub-prime lenders who would lend to people with scores down in the 500'. Lenders offered 100% financing at good rates to people with scores down to 620. There were others who offered no doc and stated income loans. Unfortunately, the implosion of the mortgage market has changed that.
In today's mortgage market, people with scores below 620 have almost no options unless they have a sizable down payment or are looking to refinance and have a great deal of equity in their homes. Those with scores less than 700 but above 620 are looking to the FHA for mortgages. This is the best place to look for poor credit home loans in today's market. The benefits of going with FHA is that they will accept lower scores than other non-insured lenders and they place more of an emphasis on your recent credit file. Once you are approved, your interest rate is not generally impacted by your credit score.
If your score is less than 620, unless you have access to a significant amount of cash, you will need to work on improving your credit score. Fortunately, there are numerous things you can do. You will want to start by getting a copy of your credit bureau. You can get this for free at http://www.annualcreditreport.com. Once you have this report, you will want to go over it carefully and notice any errors or negative credit reporting that you feel is questionable. Pay attention to accounts that are reporting late, negative accounts reporting more than seven years after the date of last activity and your credit card limits. Starting with the two or three items that will have the most impact on your credit score, you will want to dispute these items with the three credit bureaus.
Once you have completed your first round of disputes, you will want to continue the process until you have corrected any errors on your report. While you are doing this, you will want to work on paying off as much revolving debt as you can. Paying each individual credit card to down below 30% of the limit is ideal. If you lack positive good credit, you may get a parent or spouse with good credit to add you as an authorized user to an account with a low balance.
While bad credit home loans are not as prevalent today, for people with scores over 620, they still exist. Those with a score lower than this will want to take steps to improve their credit score. Hopefully, you now have an understanding of where bad credit mortgages are today, and what your options are.
Wendy Black Polisi is the founder of creditrepaircollege.com. To learn more about poor credit home loans and credit restoration please visit her on the web.
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