Before purchasing a home pre-qualifying for a loan is very important. This will give you a better idea of how much home you can afford.
When applying for a loan check your credit history this can be done through the 3 credit reporting agencies. Contact Equifax, Experian, and Trans Union to get a copy of your credit report. When you receive these verify all the information on these reports and contact credit agencies about any discrepancies. This process should be started about six months before you plan on obtaining a home mortgage loan to allow time to correct any errors.
Bad credit is a credit score that is below 620 with this credit score you would be considered a high risk by lending institutions. If you have a credit score above 620 it should be relatively easy to obtain a mortgage loan.
With a credit score of 620 or less it is not impossible to obtain a home mortgage loan just more expensive. There are 2 types of loans available for individuals with bad credit and these loans are done traditionally through sub-prime lenders.
Bad Credit Mortgage Loan is available to individuals with credit rating less than 620. With this type of mortgage loan the typical interest rate is normally at least 10%. The interest will go up as your credit score goes down. These mortgage loans are also known as Bad Credit New Home Loans.
Another product available for individuals with bad credit scores is Home Equity Mortgage loans with bad credit. Individuals traditionally take advantage of these home mortgage loans for a variety of reasons medical expense, car loans, and debt consolidation. This loan is for anyone who has built up equity in their home. When obtaining a loan like this proceed with caution, you be trading unsecured debt for secured debt and putting your home at risk. Many institutions whether it is medical or credit card will work out repayment plans with you.
If you have exhausted all resources and are still unable to obtain a home mortgage loan a co-signer maybe an option. If you know an individual with good credit who will sign with you to get a home mortgage loan this may be the way to go. Many individuals are reluctant to do this because if you pay late or not at all it becomes their responsibility and can affect their credit score.
When obtaining a loan read the fine print. Always get what is called a good faith estimate so there will be no surprises at closing. There is an option that allows you to buy down points at the time of closing. When deciding to buy down points or not run the numbers to see which is cheapest for you there are several internet mortgage calculators available.
For information about these types of loans visit bad credit home loans. Specifically check out the article on getting a loan with bad credit for more tips about getting loans with bad credit.