Home Loans for Bad Credit - Not Just a Matter of Credit Score

With the housing market depressed in many areas of the country and millions of homes being sold on short sale or foreclosed, it is a fantastic time to be a buyer.

If your credit rating has taken a few hits in recent years, yet you ache to jump into the housing market at such an opportune time, take heart and know that all is not lost.
Home loans for bad credit do exist, but you need to keep the following in mind.

  • You will definitely pay more for your home than someone who has excellent credit.
    How much more?
    If your score is in the 500 range, you can expect to have up to 4 percentage points added on to the standard interest rate for home loans at the time you borrow.
  • That said, if you have filed for bankruptcy or had your own foreclosure done on your home, you can get one of the home loans available in as little as six months. The longer you wait, however, the more favorable your terms. If you are 100% certain that you have found the deal to end all deals, hard-money lenders will give you a loan if you put 20-35% down and are willing to pay a high interest rate.
  • You can improve your credit rating quickly by getting a major credit card and using it wisely. Other ways to boost your score are to stay in your current job for more than a year, save for a down payment of at least 10% and pay all of your bills on time. All three of those might be tough for you, but if you want a home loan for bad credit, you are going to have to exercise great discipline to re-start your American dream.

Improved Ratings for Bad Credit Home Loans

Having bad credit does not have to mean that you can no longer think of owning a home. Even people with low credit scores can get a home loan, but your chances of snagging one with semi-favorable terms improve the longer that you take to re-build your credit profile.

No one is predicting a quick upsurge in the housing market anytime soon, so good deals should still be available in the year or two after you have gotten your credit score to a place where you can find good terms for a home loan.