Best Bet Nowadays for a Bad Credit Home Loan May Be FHA Lenders

Did you get a loan sometime during the past decade? Hopefully you did not go into foreclosure as so many did. Many lenders were handing out loans during the housing bubble like we hand out candy on Halloween. They were taking these loans and packaging them as security bundles and were selling them at outlandish rates to Wall Street investors as a good source of revenue.Investors and Lenders Had Their Bubble BurstThey were anything but good sources of revenue when it became apparent that most home buyers were not financially qualified for their homes. Many of those loans were variable interest rate mortgages. When the financial market lending rates went wild, so did monthly payments coming due and the amount of foreclosures taking place was unprecedented in the history of the nation. Of course, the bubble burst. Investors were left with bundles of worthless securities. Banks had to be bailed out by the government to protect everyday bank users and their everyday business.The Good Old DaysBack in the sub-prime days, a 500 FICO credit score was all you needed for home loan. Many got by with faking employment and salary documentation, or lenders just did not ask all the proper questions. For those of us who do not have perfect credit and are looking for a mortgage in the market nowadays, options may seem dim. Once happy-go-lucky banks and credit unions have tightened their lending criteria substantially. Perhaps too tight regarding the dismal economic picture of today.The Better New DaysNowadays, mortgage interest rates are at an all-time low and very enticing. But many brick and mortar institutions have raised their benchmarks for approving loans or tightened their standards. Recognizing the market for folks with blotchy credit histories who still want home ownership, other lenders have stepped in to fill the gap in this lucrative market. Many of these lenders can be found online. If you are careful, you can find many reputable lenders online with some very good deals for bad credit home loans. Application is easy, documentation requirements small, time for approval swift.Federal Housing Authority (FHA) LoansMost of the housing bubble lenders are no longer in existence because of their risky ventures, so forget them. If you do not want to obtain a loan online, your best bet would be to seek out lenders that are FHA qualified. As with any financial product or service, you need to shop around to find the best interest rates, the lowest fees and the most comfortable repayment terms.Government BackedOnce in a while, the feds do something right. Although strict Constitutionalists would disagree with the premise and the act, FHA loans are guaranteed by the government. Should you default and the lender have no recourse, the government will buy back the loan at current market rates. This allows home ownership for many Americans who would otherwise not qualify. It lowers the risk for lenders. And repayment terms are standard single interest rate loans with decent repayment terms.Refinancing Is an Option as WellIf you are already in a home loan and want to take advantage of the low interest rates, look for refinancing with FHA qualified lenders as well. Bargain-hunting homeowners with not-too-perfect credit histories, should look for low interest bad credit home loan refinancing under FHA auspices.