How Bad Credit Home Buying Is Possible In Today's Economy

You may think that bad credit home buying is a thing of the past since subprime lenders went out of business or stopped loaning money for a new home. It is not only still possible to get a home loan with bad credit, there are some things you need to know to get the best rates and financing possible.

If you are in the market to buy a new home you will want to obtain the services of a qualified real estate agent who knows the law and your financing options if you have bad credit. The real estate agent may suggest that you try credit repair before you apply for any loans in case there is erroneous information in your credit file. Often the mistakes contained in your credit file are the one thing that is keeping your score low and once they are taken care of you may be pleasantly surprised at your new higher credit rating.

If that is not an option a good real estate agent can find alternative financing for you if you are looking to buy a home with bad credit. Bad credit home buying doesn't mean that you have to pay outrageous fees and interest rates and a good agent will be able to offer the services of reputable lenders who are willing to work with you and your particular credit situation.

If you have filed for bankruptcy or had a prior foreclosure on your record, the real estate agent may suggest that you wait the required amount of time after these events which usually range from two to four years in order to capture the best interest rates on a new home loan. A bankruptcy will remain on your credit report for approximately ten years, but you will be able to qualify for a home loan after four years with good interest rates available to you. If you get an FHA home loan the required wait time is usually two years after a bankruptcy or foreclosure.

With bad credit you may not get the best financing or interest rates that someone with near perfect credit will get but if you have a sizeable down payment, it can drastically reduce your monthly payments and interest rates as if you did have good credit. It all depends on the amount of funds you have to work with for a down payment on a new home.

Another option a real estate agent may suggest with bad credit home buying is purchasing a home on a land contract. This is when the seller of the home will offer personal financing to a buyer and there is usually no qualifying and the interest rates are a lot lower than going through a traditional lender. The terms will often be better and you may be able to get a monthly payment that you can better afford with this method.

By: Jeremy C. Winters

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