Home Financing With Bad Credit
Print View - Published: Tue, 15 Mar 2011 at 12:05 PM
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Having a low, or bad credit score will not prevent you from gaining financing for a new home. In fact, even if you've filed for bankruptcy in the past, or worse yet went through a previous foreclosure, you can still get someone to fund your new mortgage--but you will need to show ample ability to repay the loan and be prepared to pay much higher rates as a result of being considered a higher risk. But, if you're in a position to pay and you really want that new home then the bottom line is home financing with bad credit is possible.
In addition to paying higher rates due to your risky credit profile, the closer it is to any previous bankruptcy or foreclosure then the more your lender is going to require you to put down up front. In the most extreme cases it's not unheard of for lenders to want up to a 35% down payment. Of course, the further away from any previous credit hits then the lower down payment you will be required to make is going to be, and the more favorable your loan terms will become. Remember, a bankruptcy affects your credit for ten years.
However, having a bankruptcy in your past is not the deal-breaker that many assume it is. In fact, if it was more than a couple years ago, and you've had steady employment and a clean credit history since filing--displaying a reliable financial profile, then many lenders will view you as someone with a sort of "clean slate" because they know you have no other outstanding debt.
Even though bank financing is possible with a bad credit rating or history, it's often beneficial in situations like this to seek alternative methods, such as seller financing through a land contract.
If you can strike a deal with the seller, it typically avoids having to jump through special hoops for qualifying, will come at a lower interest rate and have more flexible terms.
The best idea is to look at all of your options thoroughly and then decide which is best for you.
About the Author
This article was written by a contributing staff writer of www.badcreditfinancingpage.com
While every effort has been made to verify the accuracy of the information contained within this article, this content is for informational purposes only and is not meant to substitute for the educated and informed advice of professionals.
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