Bad Credit Home Financing – Mortgages for Less than Perfect Credit

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Homebuyers must pick loan programs based on their credit history.
Because of an influx of new home loans creating more financing options, many
people are buying or refinancing homes with poor credit. Hence, low
credit scores, bankruptcy, self-employment, or loss of job will not
prevent some from qualifying for a mortgage loan.Who Qualifies for Bad Credit Home Financing?Credit scores range form 300 to 850. Those who achieve a high credit
rating are considered prime loan applicants and have a world of options
available to them. Of course, a high credit score is not required when
applying for a mortgage loan.Understandably, situations occur that make it difficult to maintain a
high rating. These may include excessive debts, loss of employment,
foreclosure, bankruptcy, and so forth.Because bad credit is widespread, several lenders have chosen to
concentrate on these sorts of mortgage loans. To qualify for a prime rate
mortgage, most lenders require a credit score of at least 680.On the other hand, bad credit or subprime mortgage lenders will approve
loan applicants with lower scores. Thus, a bad credit history does not
necessary mean an automatic loan rejection.Mortgage Loans Available to Bad Credit ApplicantsMany loan programs are available to individuals with bad credit.
However, these are not without limitations. For example, various lenders
offer 100% financing to bad credit applicants. Unfortunately, 100%
financing is only available to homebuyers with FICO scores of 540 and higher.
If your credit score is lower than 540, lenders may require a down
payment.Bad credit homebuyers may also be able to secure 103% financing to
assist with closing costs. Yet, these applicants will not qualify for a “no
doc mortgage loan.” No documentation loans are ideal for self-employed
persons or those who prefer their privacy.Stated-income mortgage loans are also very attractive. This loan
appeals more to self-employed homebuyers who write off a large portion of
their income on taxes. Sub prime lenders will offer 100% financing on
stated-income loans. To qualify for this loan, credit scores cannot fall
below 620.Researching Various Bad Credit Loan OptionsIf you have bad credit, it is important to choose a mortgage broker or
lender that is capable of offering information about bad credit home
financing. Before selecting a lender, request quotes from brokers and
inquire about different home loan programs. There are hundreds of mortgage
loans available, which accommodate various incomes, credit types, and
employment situations.