Doug's Credit Center Blog

How to Get a Home Loan with Bad Credit

So much excitement comes into your life when you are about to obtain a new home loan, but a bad credit score can change everything. Even if you’re opting for a car loan instead of a home loan you will find poor credit history can make the application process more difficult. Therefore, it’s important that you are confident in your ability to get approved for home financing, before completing an application.

Fixing Your Finances

The first thing that must be addressed is the current state of your credit, and bettering your financial situation. Getting approved for a home mortgage with bad credit is already tough enough, but improving your finances in any capacity can quickly simplify things. Here are some suggestions you can use to improve your situation:

  • Work to pay back loans and credit card debt.
  • Make a lump sum payment to take care of a lot at once.
  • See if any errors are being reported on your credit report.

Once you have crafted a plan, you are one step closer to that brand new mortgage or potential car loan financing opportunities that you come across.

The Overall Picture

When you go to get approved for a mortgage, your credit scores are not the only financial factor that is scrutinized. The lending entity is also going to want to see how much money you make and how much of a payment you will be putting down. These factors can really help you out if you have low credit scores. Perhaps you have a huge amount of money saved for a down payment. Let’s say you are putting 50 percent down on the house. Your credit scores are unlikely to impede you as much as if you were putting only five percent down.

All The Details

Other factors must be considered when you are trying to purchase a house with poor credit scores. If you are buying the house with another person, this other individual might be able to qualify alone. Then, you could technically act as a renter in the house, instead of impeding the ability to buy it in the first place. You could also consider purchasing a smaller house that is more suitable to your current budget. Lastly, you can look into house-purchasing programs specifically designed for people in your situation. Remember, when you opt for bad-credit programs, you will probably end up paying quite a bit of money in interest.

Situations with poor credit do happen, and you need to make the best you can out of them. Hopefully, when you follow these tips, you can call yourself a homeowner before long.

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