Friday, February 8, 2013

Can I Buy a House If I Have Bad Credit?

Can you buy a house if you have bad credit history? The answer is, yes. It is possible to buy a house or get a home loan despite bad credit. Nevertheless, consumers are strongly advice to work on credit improvement first before taking the next big step.




Purchasing a house is a huge investment so before signing up for mortgage, it is very important to carefully weigh the situation and consider the pros and cons of your decision. It is interesting to note that mortgage lenders offer the best deals to customers with good credit history or excellent credit rating.

On the contrary, consumers with unimpressive credit scores may have limited options when it comes to choosing mortgage loan deals. If you can wait for another year before purchasing a home, then you will be in a much better position to apply for mortgage once your credit score has improved.

How to Buy a Home with Bad Credit

Should you decide that you want to buy a home today, what are the steps that you can do? For instance, you may have been discharged from bankruptcy a few years ago and so far your credit score has significantly improved. If you feel that you are ready to take on a mortgage loan, consider the following tips:

Check your credit report. See to it that your credit report contains no error or inaccurate information which could be pulling down your score. If you have been discharged from bankruptcy 7 years ago, request the credit bureau to delete the record of bankruptcy and any other negative information from your report. If you are on your way to good credit, consider waiting a few more months before applying for a loan.

Evaluate your finances. It is very important to make sure that you will be able to keep up with your monthly loan payments from the start until the end of your loan's term. Is your monthly salary sufficient to cover for your expenses and mortgage loan payments? Are you certain that your employment status is stable at least within the next five years? Keep in mind that if failing to keep up with your mortgage payments would mean losing the home to your lender.

Find the right lender. Finding the right lending company is another challenge. Take note that not all subprime loan offers in the market are legitimate and fair. You may come across predatory lenders who may take advantage of your bad credit score by charging excessive interest rates and unreasonable terms. To find a good lender, you need to spend time doing research and comparison.

Choose a reasonable loan package. How much do you plan to borrow? It is very important to get pre-approved first before searching for houses on sale so you do not waste time considering homes that are out of your budget.

Plan repayment. It is very important to have a definite repayment plan to make sure that you can stay true to your payment obligations. It's a good idea to consult a trusted credit counselor who can help you create a doable repayment plan that fits your situation.

Article Source: http://EzineArticles.com/7423167