Thursday, December 20, 2007

Bad Credit? You Can Still Buy A Home!

Do you want to buy a home but feel you cannot because you have bad credit? The reality is you are not alone and most people are embrassed and discouraged because of their poor credit history. The average American now carries about $8,000 in credit card debt and bankruptcy rates have soared over the past couple of years. In addition, filing for bankruptcy stays on your credit history for 10 years, and can significantly lower your credit score. The good news is that you can buy a home and there are many mortgage companies who specialize in working with consumers with bad credit. They can help you to get a clear picture of where you stand and what steps you need to take to achieve your goal of home ownership. However, keep in mind it is a good idea to do research and make sure you are dealing with a reputable company. It is always advisable to shop around for the best bad credit mortgage company in the market. The lending market can be broken up into two main segments, the prime, those with average to good credit who are not huge financial risks. Then there is the sub prime market, with those who have poor to very bad or no credit. Lenders can give ratings to a certain sub prime client giving them a rating from A-D: A being the best rating and D being the worst. When you fall into the C or D category, you are considered very high risk and more likely to default on a loan than that of a person with an A or B rating. Sub prime lenders generally give loans to even the highest of risk cases. They look at the same information that a prime lender would look at to evaluate the type mortgage you can have. They look at credit history, income, expenses and long term debt. Even if you do have foreclosures, bankruptcies, delinquent payments, and outstanding debt, they will take all of this into consideration. If you can show steady employment, a good income, an effort to pay back the money you owe and are doing it in a timely fashion, you are more likely to get a better rate than that of someone who is not taking any steps to fix their credit. Fortunately the sub prime market is extremely competitive, even for the worst credit cases, so you do not have to accept the first lender who offers to loan you money. Take your time, do your research and shop around and compare rates. Everyone makes mistakes, and buying a home is still an option regardless of your credit history. As long as the sub prime market continues to be competitive, you will have a huge advantage. Keep in mind however; it is important to take steps to repair your credit, and buying a home can aid in this. If you make you mortgage payments on time every month, then you can actually help to get your credit back on track. It is possible to buy a home and repair your credit at the same time! Take advantage of the opportunities you have at your fingertips.
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