Getting a home loan with bad credit isn’t impossible. You just need the right advice. Here are some tips to get a home loan even if you have bad credit.
First, figure out exactly how bad it is. Your credit may not be as bad as you think! Order credit reports from all three credit reporting companies. Check for mistakes. Seven out of ten credit reports contain mistakes, many of which lower credit scores! If you’re in the low 600s range, it might be worth taking some time to pull up your bad credit before applying for a home loan.
Next, figure out the steps you can take to start fixing your credit. The process of buying a home doesn’t happen overnight. Sometimes you can start making your bad credit better even while you shop for a home. Put your bill on auto pay to make sure they’re all paid on time. Start paying off as much credit card debt as possible. Fix any errors on your bad credit report.
Finally, look into home loan programs especially for people with bad credit. It’s easy to get roped into too-good-to-be-true scams, though, so look carefully at the terms you’re being offered. With bad credit, you will get higher interest rates, larger down payment requirements, and bigger closing costs. However, these shouldn’t be astronomical compared with what people without bad credit get.
Some bad credit mortgage programs to look into include FHA loans from the Federal Housing Administration. These are great for people with poor credit history or no credit history at all. Some states also have programs specifically for those with bad credit. You’ll have to show that you’re getting back on track financially, but you’ll be able to get help through these government programs.