Is It Too Easy to Get a Bad Credit Home Loan?

Looking for a new home? Once upon a time it was relatively easy to land a bad credit home loan, but this is no longer the case. Back in the boom times at the middle of the last decade, lenders were passing out mortgages as if they were cigars. This was folly on the part of the lenders as much as it was on the part of the borrowers. Everyone got caught up in the housing boom and many loans had teaser rates in the form of adjustable rate mortgages. When the mortgages adjusted, the new home buyers were not able to adjust. Thousands of home owners are now in the throes of foreclosure.Even Good Credit Can Be BadNowadays, unless you have at least 25% equity in your home, you may find it a challenge to land a bad credit home loan. In fact, if you have a credit score lower than 680, you probably will not get a conventional mortgage or home equity loan. You will be treated as if you have bad credit.Check With Mortgage BrokersIf your credit score is below 680, or if you have problems proving your income because you are self-employed, you can still get a bad credit home loan. The best place to start your shopping would be with a local mortgage broker. Private companies or individuals are more inclined to offer bad credit home loans than the traditional lenders such as banks and credit unions.Equity Trumps Credit ScoresThese private companies entrust their mortgage brokers to find them qualified home buyers. These brokers also administer or service the loans. Qualification relies more heavily on the equity built up in the housing real estate rather than on the credit scores of the borrower.Rejection Is Not the EndIf a traditional brick and mortar lender declines your request for a mortgage, it is not the end of your home buying dream. The fact is, because of the folly of the last decade, many banks have severely tightened their qualifications for credit of almost any type. Your credit may not be as bad as you would think. If you have not done it already, you need to get copies of your credit reports and scrutinize them. If there are discrepancies, get them fixed.Traditional Lenders Tighten UpIf you have not made late payments or defaulted on any loans, the rejection was probably solely on the part of the bank. Go ahead and make an application with another bank. But watch your step. More than four applications a year will put dings on your credit rating. Banks will start to look at you as desperate. You may want to take your credit reports to a local broker and let them help you discern the possible options regarding your scores and your financial profile.Non-Traditional Lenders Are Standing ByJust because you have been declined by banks, that does not put an end to your home buying or home improvement dreams. Many Schedule B banks, trust companies, and even some credit unions offer mortgages at rates that are very close to bank rates. In this credit-tight economy, persistence with caution is the catch-phrase. You will eventually find a lender who is willing to make a bad credit home loan. And check your credit report. You may be better off than you thought.