Bad credit happens for many reasons, from defaulting on loans to bankruptcy. Some people are irresponsible with credit while others perhaps couldn’t pay their bills due to being unemployed. If you are looking for another option besides the bank then you can consider Highly reviewed legal money lenders that are there to help you with your financial problems. Or else you can read this article to find out how you can get a loan despite your bad credit. A bankruptcy on credit report
Bad credit sometimes is the result of having filed bankruptcy in the last 10 years. Buying a home while the bankruptcy is still on your credit report isn’t as impossible as potential buyers may think. The truth is that it is possible, but many bank programs will make the buyer wait for 2 years after the bankruptcy has been discharged. However, is two years really that bad? It’ll take two years at a minimum to build up a positive credit history after the bankruptcy and it provides time to save for the down payment.
Bad credit isn’t always the result of bankruptcy, sometimes it is caused by derogatory items on the credit report. This can be from late payments or no payments. Regardless of the reason why you’ve refused to make a payment to a creditor, some banks will require delinquent bills to be paid before considering a home loan. Even if your bank doesn’t have that requirement, it might be a good idea to pay off the delinquent accounts in an effort to clean up your credit report. Click on Raising Your Credit Score for more information.
The down payment
Banks have gotten stricter since the mortgage crisis and have tightened the restrictions on home loans. In the past, 100% financing was possible in some situations, but this is a rarity if not impossible now. Still, some home loan programs only require a 3% down payment. However, the chances are pretty good that for most people it’ll be a minimum 5% down payment. When the buyer has bad credit, it is a possibility that they might be looking at a 10% to 20% down payment. Even if a large down payment isn’t required, if your application lists that there will be a 20% down payment it’s more likely to be approved.
Starting a new job
It’s okay to change jobs within the same company, but some banks are going to require the buyer to have been at any new company for at least 6 months before a home loan would be considered. If there has been a period of unemployment, this will be a problem as well. Most banks require a solid two-year work history.
When a bank loan isn’t an option, owner financing is the last resort that is a viable choice. All owners will have different requirements for financing, but the odds are good that they’ll require less of a down payment than a bank. It’s a good idea to have a home inspection regardless of the financing, but with owner financing, it’s especially important because the owner may not be completely upfront about the home’s issues. For more information on the owner, financing click on Buying Your First Home.