Whether you want to refinance your existing mortgage or obtain a loan for a new home, the first step should be an analysis of your finances and gaining a realistic view of today’s mortgage loan market. Recent changes in the mortgage market have left borrowers confused and anxious about applying for a new loan.
Where to get bad credit home loan
You can get bad credit home loan from different credit unions, banks and some non banking financial institutions. However, after the credit crunch and recession of 2007, the majority of the lenders are not willing to offer loans to people having low credit score. Some lenders may offer you the loan, but, you need to pay a higher interest rate. The lender may also ask you for some additional security in order to reduce his risk of losing money, in case you fail to repay the loan.
Eligibility criteria to get the loan
Certain lending institutions have made the eligibility criteria to get the loan a bit stringent. These are:
· You should be an US citizen
· Your age should be at least 18 years
· Your credit score will not be lower than 580
· You can afford to make at least a payment of $1000 every month
There are basically 2 major types of bad credit loans. These are secured bad credit loans and unsecured bad credit loans.
However, these days bad credit home loan is hardly available. With the score of 580 you may qualify for only an FHA loan. Currently, prime borrowers are in demand with lenders. Prime borrowers typically have a credit score above 700, documented income and assets and money at hand for down payment. If you do not meet these criteria, it is better to first clean up your credit report and improve your credit score. There are several ways in which you can work to build up your credit and improve your chances of getting approved for a mortgage home loan in the future.
