Can you get a Home Loan with Bad Credit?
Having some flaws in your credit report does not prevent you from buying a home.
13:11 30 December 2019
Yes, it can be done, regardless of your credit - good or bad. Here, we will explain to you how you can buy that dream house with bad credit.
Look for errors
When you have bad credit, you should not blame yourself for that flawed credit history. Often, creditors make a mistake when they report a consumers’ credit history. In truth, there are one in every four people find some errors on their credit reports. You have to make an effort to check for some slip-ups in your own credit report. Once you do, contact the company that gave you the erroneous information and urge them to update the same. Once corrected, this will help improve your overall credit score rating.
Pay your home loan for bad credit
Depending on the creditors’ credit score rating, he might still be eligible for bad credit score home loan options. However, you must expect to shell out for a much higher interest rate. When you get a mortgage that comes with a much higher rate, you will then have to pay more money to your lender in the form of interest. In this case, you can always partake the home-buying associations. With rising interest rates, it is crucial to purchase right about now and then take in the higher rates.
Obtain a bad credit score home loan
The Federal Housing Administration or FHA loan is another option for buyers of homes with bad credit. They offer home loans for rookie home buyers and creditors with bad credit scores. They will grant home loan options for those with at least 580 credit score, where the downpayment is set at 3.5%.
So, what’s catch? Since the government provides bad credit score home loans, you will be required to pay for the mortgage insurance premium. It is at least 1.75% of your FHA loaned amount. It is best to do careful research before you explore your FHA alternative.
Increasing home loan down payment
When you have bad credit, but you have cash on hand, some home loan providers may loosen up and allow your loan if you make a much bigger down payment. The more you place as down payment, the more you minimize your risk as a bad credit borrower. When you increase your downpayment for your home loan to as much as 30%, you will make sure to fortify your home loan application, which makes you eligible as a lender. However, you have to bear in mind that your negative credit score will adversely impact your home loan interest rates.
The chances of owning your home are sure to surpass all these negatives at any time. So, when you are convinced your bad credit history is 100% sure to dampen up your elusive dream home plans, stand up and chin up! Try these tips and work on that bad credit. You can always develop a much better relationship with other lenders, tap on a more willing lender, and explore your mortgage choices today!