Home Buyer & Home Seller Guide

Just because you have bad credit, or have been declared bankrupt or are experiencing foreclosure, does not mean that you will be unable to obtain credit in the future. There is one thing that you will need to keep in mind and that is, you will be paying more in the form of interest than someone with a good credit score. There are several options for consumers who have bad credit out there. Listed below are some things that you may need to know in this regard:

Home Loan And Bad Credit: Effects Of Bankruptcy

While the gestation period after filing or being declared bankrupt is seven years, the bankruptcy listing will remain on your credit report for at least 10 years. In certain states it stays as long as 12 years. Ideally consumers should wait for a minimum of four years prior to applying for a conforming loan (loan with a major financial institution), however the FHA stipulates a period of 2 years from the date you come out of the bankruptcy period. You may be able to qualify for a home loan with as little as a 3.5 percent down payment. In certain cases clients prefer to go to hard money lenders and could end up having to put down as much as 20-30 percent down payment, with rigid loan terms that in most instances are not favorable.

Tips:  Qualification For A Home  Loan With Bad Credit

Once you have emerged from bankruptcy, it may be beneficial to obtain a credit card from a major financial institution. Keep in mind that you will have to make the repayments on it in full every month to keep improving your credit score.

In addition you also:

• Must stay current with all your repayments.
• Do not fall behind on bill payments.
• Ensure that you have steady employment and are earning a steady salary or wage.
• Demonstrate a regular savings pattern and aim to save at least a 10 percent down payment.
• Shopping around can also be another alternative for someone seeking finance. If you have poor or bad credit history, sometimes mortgage brokers will tell you that they can’t help you. Don’t lose heart. There are numerous mortgage brokers out there who will be able to help. There are mortgage brokers who have based their practice around the fact that they work with consumers who have a bad credit history.

If none of the above mentioned alternatives seem appealing you may want to consider vendor financing. It is not always available however, in some instances can be very appealing. In vendor financing you are obtaining a home  loan from the seller. This usually means that you do not have to go through a qualification process; in addition you receive extremely flexible terms and conditions. Another major plus about vendor financing is the interest rates is comparatively much lower.

In spite of vendor financing, it is always beneficial to keep checking with your financial institution if you can refinance back to them.