Why You Should Take Advantage Of Bad Credit Home Loans


Anyone who can purchase a home right now should. That includes people with bad credit. There are still programs available that will help people get a mortgage even if their score is low. Of course, these types of mortgages have some disadvantages to them, but they also have many advantages, especially in the current market.

A bad credit mortgage will have a higher interest rate attached to the loan than a conventional mortgage. But, with interest rates so low, even these higher rates are not that bad in comparison to a few years ago.

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You may be required to make a larger down payment. Again, this is nothing to really worry about. There are many home buyers' assistance programs that will provide down payment assistance. If you are a first time home buyer you may qualify for additional assistance. These programs are not required to be repaid, so you are basically receiving free money for your down payment.

A mortgage for someone with low credit scores may have a two year lock- in on the contract. A lock- in is where the mortgage lender states that you cannot refinance the loan at any time during the first two years of the mortgage. These lenders understand that their rates are higher, and know you will refinance as soon as possible. Many require this two year guarantee so they can generate some income off of the loan.

If you have a two year lock-in take advantage of this also! Use this two year period to clean up your credit report and raise your score. As you improve your credit and make your mortgage payments on time, you will be able to easily qualify for a conventional loan when you do refinance.

A mortgage based on bad credit will also increase your credit score right when you are accepted. Home ownership ranks very high in the credit reporting agencies. Once you have a mortgage, of any kind, you will see your score raise by a hundred points or more. This boost to your score, and cleaning up your credit in other fashions will benefit you in may ways.

Bad credit mortgages have often been blamed for the housing crisis. However, the truth to this is that unemployment is the culprit. Anyone who is not generating an income cannot pay their mortgage, no matter what kind it is. Bad credit mortgages are a good thing for people who have had some rough times in their past.

Take advantage of the low interest rates and home prices now. As the economy improves, and it will, home prices will begin to rise again and you will have considerable equity available in your newly purchased home.


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