We hear nearly every day how important it is to ensure we have a good credit score. High credit scores make for good financing terms whereas bad credit scores can result in high interest rates or even the possibility of no financing at all. When we leave school, most of us more often than not rent our first homes. From there we have every intention to take the next step up the ladder and buy a home of our own. This article gives an insight into how people can still purchase homes with bad credit scores and even bankruptcy on their credit reports.
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Bad credit and bankruptcy can make things much more difficult when it comes to purchasing a home. However, it does not make them impossible. The key is knowing when to apply and demonstrating that you are a reformed character as far as your finances are concerned. Bankruptcy does have long term effects. The term between filing is seven years but it can adversely affect your credit rating for up to 10 years.
There are options however. FHA loans are available for those that are on low incomes or have a bad credit history. They will loan money with as little as two years passing after a foreclosure or filing for bankruptcy. They also ask for as little as 3% as a down payment. Individual circumstances will apply but they are a very viable option.
If you maintain a 600 credit score after an acceptable period of time, then sub-prime lenders are an option. They will many times offer 100 percent financing on the home but the rates will be higher than if you went with a standard lender. But in the present financial climate that is not a great way to go.
There are hard money lenders. These will make funds available with as little as 6 months passing after bankruptcy. However, they will quite often want 25%-35% down payment and will have high rates of interest. These rates are adjustable over time. If you maintain consistent payment then they will start to come down.
Finally, there are bad credit loans and even bad credit mortgages available for people who are desperate to buy their own home. But like all the other options the repayment rates tend to be pretty high.
Bad credit and bankruptcy are things that we all want to avoid. However, if it should happen then remember it is not the end of the world. With some effort you can get financing for a home. It may cost more but in the end it could be worth it. It will take a bit of time to sort out your finances but I honestly believe that you will benefit from the unpleasant experience if you totally focus on the issues at hand and start to improve your credit history.
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