Friday, March 22, 2013

Home Loans With Bad Credit: What Can Improve Your Chances Of Approval

Exactly how bad having bad credit is these day is debatable. For many, it is sufficient reason to panic, believing their financial reputation is ruined and no lender will ever touch them again. Others, however, are better informed and know that even when looking to buy property, getting home loans with bad credit is still possible.

The attitude that lenders have towards poor credit scores is not as strict as it once was, and the growth of online lenders means there are far more borrowing options available. All that is needed when getting home loan approval with bad credit is to meet the required criteria, and know these options.

Also, the fact that economic hardship has brought difficult times to even the most responsible borrowers means that a low credit score is no longer so accurate as a risk indicator. So, for applicants with a good history, regardless of their score, getting bad credit home loans approved is now easier.

The Reality of Bad Credit

Of course, despite the softer attitude towards a low credit score, there are still penalties that borrowers face even if a home loan with bad credit is approved. The most obvious is that the interest rate applied to the loan is higher than normal. Just how much higher depends on the credit score and on the lender, but it does mean that the monthly repayments are slightly higher.

A second consequence of getting home loan approval with bad credit is the extra fees and penalties sometimes charged. Some lenders will charge strict penalties if there is any delay in making repayments, while extra fees can sometimes be applied for processing your application.

For this reasons, it is always a good idea to check the small print, and enquire if any extra fees and charges exist. If this is not done, then getting bad credit home loans approved might not turn out to be such a good thing after all.

Further Advice

Some more good advice is to ensure a down payment is available when applying for a home loan with bad credit. The reason is two-fold. Firstly, by saving perhaps 10% of the property price as a down payment, the lender sees the commitment the applicant has to buying a home. It is not easy to save what might be ,000, without considerable financial discipline.

Also, a ,000 down payment makes getting home loan approval with bad credit easier because it means the required loan is reduced. So, a home worth 0,000, with require a mortgage of 0,000, immediately lowering the debt.

Another piece of sound advice is to consider all options before making a decision. It might seem that having a bad credit home loan approved by your local mortgage provider is a great move (and might be) but there may also be better deals out there - especially online.

Online Lenders

In fact, it is online that the best terms and conditions are generally found when seeking a home loan with bad credit. It really comes down to the fact that lenders are in a highly competitive business, so for online lenders to survive, they focus on lending to those who traditional banks are set to reject. So, getting home loan approval with bad credit is more likely online.

The terms tend to include more competitive interest rates and higher loan limits, but before having a bad credit home loan approved, check out the small print. Also, be sure to check out the lender on the Better Business Bureau site, to ensure a home loan with bad credit agreement does not turn out to be a major disaster.

Tuesday, March 12, 2013

Bad Credit Home Loan Refinancing Can Save You From Drowning In Your Current Mortgage

The major housing bust of the last decade has left a lasting impression on many home owners' credit reports. Due to the nasty increases in adjustable rate mortgages, housing payments have gotten out of control and home loans are falling into default. If you are in such a situation and are watching your bad credit become worse, the option of refinancing your home loan could be the last available in order to avoid foreclosure.

What Is a Home Loan Refinance?

When you opt to refinance your current home loan, you essentially take the old loan and its immense burden out of the equation and off of your credit report through repayment with a new loan. This will help you to save your home because the process of home loan refinancing will decrease your monthly payment to make it more manageable given your current income and associated financial condition.

Even with bad credit, home loan refinancing can be an option since many lenders have seen an increase in defaults and cannot handle one more empty home on their books. As a borrower in trouble, you should take advantage of these special offers to both save your home and salvage your bad credit.

Home Loan Prep Work

Before you start the process of finding a refinance loan for your mortgage, there are certain steps you can take to improve your chances of getting a good deal. First, order a copy of your credit report from one of the three major credit reporting agencies: Equifax, Trans Union, or Experian. Look over this report thoroughly and double check that there are not accounts or statements on there that are false. Having inaccuracies on your credit report can needlessly lower your overall score.

Next, make sure that you review all of the paperwork that will be required to apply for refinance loans. Generally, this will include current information on your existing mortgage, income information, and other documents that prove your identity, residence, etc. By having all of this information together beforehand, you eliminate needless waiting periods once the loans application process has begun.

Finding a Bad Credit Lender

Though looking towards a traditional financial institution such as a local bank or credit union is a great option in some cases, for bad credit home loan refinancing, you really need to stick with a lender who specializes in loans to those with less-than-perfect FICO scores. Generally speaking, these lenders operate online and can be accessed easily through either web-based applications or telephone.

One important tip to keep in mind is to be sure to do a background check on any lender you are considering. Though many of the lenders you speak to will be legitimate, the internet is still rife with scam artists who will use your bad credit as an excuse to take advantage of you.

You Can Get Relief with Refinancing

If you feel like you are treading water with your home mortgage and there is little hope of relief, finding the right opportunity to refinance could be your lifesaver. Bad credit can certainly be a problem, but with the right preparation, it can be overcome and the home loan refinancing process can save you from drowning.