Buying a home is an investment in your future. Even with bad
credit you can start the process of rebuilding your credit and
building your net worth through your home's equity. By
monitoring your credit, researching lenders, and selecting the
right loan, you can purchase a home at reasonable rates.
Fix Your Credit First
Before you start shopping for a mortgage, make sure that your
credit report is accurate. Follow up with the credit monitoring
service to make sure all errors are fixed. You can get a free
copy of your report from several companies.
While credit events remain on your report for up to ten years,
they cease to be important after two years. So with a bankruptcy
three years ago, it is possible to qualify for an "A" rated
mortgage.
But there are other factors that determine your loan rates, such
as your cash reserves and the size of your down payment. You can
qualify for a conventional loan rates even with a poor credit
score.
Avoid The Wrong Kind Of Lenders
There are companies that would take advantage of your credit
situation. They would have you believe that with bad credit, you
will have to pay huge closing costs or rates double or triple of
conventional loans to buy a home. Run from these lenders.
Subprime lenders offer bad credit loans at one to two points
higher for each drop in credit rating. And loan fees are
comparable to conventional loans. In order to find these
companies, you need to request loan quotes.
With online lenders, you can receive these loan estimates within
minutes. Based on your personal information, you can get a
realistic picture of your loan costs and mortgage payment. And
when financing through a subprime lender, you don't have to pay
for private mortgage insurance if your down payment is less than
20%.
Keep An Eye On The Future
When negotiating your mortgage, make sure you have the option to
refinance in the future. Ask for no early payment fees, so you
won't have to pay thousands if you choose to move or refinance.
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