Bad Credit Home Mortgage Loans
Loan options for those with bad / adverse credit history
A bad credit home mortgage loan may be the only option for those who find themselves being knocked back and failing to qualify for a loan with normal rates and limits. Many people find that they may have borrowed heavily in the past, have been unable to repay debt or even find it difficult to provide proof of income. In these cases, these customers will have to approach lenders who allow for nonconforming conditions. Here, we take a look at the best services available, and how to go about getting a quote.
There are a few companies on the market who are willing to offer consumers with bad credit ratings a loan to purchase their home. However this service does not come without a price. As consumers with unfavorable credit scorings are a high risk, lenders tend to offer loans with very high interest rates. These rates reflect the risk the lender is taking by offering the loan. Lenders may also put a limit on the amount the borrower can have. These limits are usually a lot lower than limits on conforming loans.
Those companies specializing in bad credit home loans offer flexible guidelines and do not enforce the usual underwriting requirements. For example, lenders of bad credit home mortgage loans will not require any evidence of income for those with hard to prove income. It is up to the consumer to accept a much higher rate of interest and keep up with the monthly payment.
The Bad Credit Alliance is a network of lenders that deal with bad credit mortgages. They offer a helpful service where you can apply for your loan online. However, they do have a friendly team of trained professionals who would be happy to discuss your requirements.
Another company that deals with loans for people with a poor credit history is whynotown.com. Their usual requirements are that you have enough income every month to cover the mortgage payment. They also like to see that you would have enough funds to pay any closing cost and other expenses related to home buying. In addition, if you have two good credit accounts, then you may be able to secure a deal.
The majority of regular lenders would not offer a loan to a consumers they believe to have too much existing debt. Bad credit loan lenders will allow for higher debt ratios but in doing so offer a loan with a high interest levy. And the same goes for those who, in the past, have made late payments and have incurred other credit problems. Nowadays, it is even possible to find a lender who would be prepared to lend funds to someone who has been made bankrupt in the past.
It may seem strange to expect someone with existing debts and a relatively low income to pay higher rates than anyone else. However, it is important to remember that lenders have a responsibility to cover their risk and to perhaps gain commitment from those who really do need a loan. Keeping up to date with monthly repayments on your mortgage and other loans could possibly lead to being given a higher credit rating in the future and therefore enabling you to apply for more favorable rates in years to come.