Home Loans with Bad Credit
Home Loans with Bad Credit. With the economy the way it is, everyone’s clutching their purses really tight. Banks and other financial institutions in particular have become very picky about who they give a home loan to and who they don’t. They’re especially wary of people who have bad credit. Bad credit to them means high risk, so if this is you, you’ll either have to agree to really high interest rates or offer some substantial property mortgage as collateral.
So basically, they’ll give you a hard time and they might not even approve your application for a home loan. If they do approve your home loan, you’ll be forced to pay really high interest rates, which at some point might just become too impractical to pay. It’s a sad situation to be in but that’s the reality we have to deal with.
If you’re dead set on getting a loan to finance a property mortgage, here are a couple of tips that can help you. They won’t make your debt disappear, but they will get you the financing that you need.
Borrow from friends and family. If the bank isn’t lending you any money, then find friends and family who are willing to give you a loan. You most likely won’t be able to borrow the whole amount from just one person, but if you can get everyone to chip in then you might just have enough for a new home. Friends and family will be a bit more liberal with collection too, and some of them might not even charge you interest.
Try borrowing from a credit union instead of a bank. Credit unions tend to be a bit more personal and understandable. Unlike banks that only sees the bad credit stamped all over your financial documents, credit unions actually talk to you and consider your problems. A lot of them are operating because of altruistic reasons and if they see that you really need help then they’ll probably lend you the money.
Prepare collateral. If you have collateral, banks will be more inclined to work with you. Assets are always appealing to banks because they can run after them even if you go bankrupt.
Make sure that you have a substantial amount of money for the down payment. A large down payment can often improve the terms of your home loan. So it’s best to pay more at the beginning so that you can save in the long run by paying less interest.
Find someone to cosign the loan with you. If you know anyone with a good credit score who is willing to cosign with you, that just might be enough to offset your bad credit. He will be exposing himself to risk because of you though, and remember that if you can’t pay and he’s forced to cover for you, you’ll be financially liable for all his losses.
The ideal way to get better terms for any property mortgage will still involve getting a better credit score. So stop using your credit card and start paying your debts. If you need the loan immediately though, the above tips will help you out while you’re still struggling to improve your credit rating.