Top Choices on Home Loans for People with Poor Credit Scores
Finding the right home loan is a major part of buying your house. While the search for the perfect home is the first step you'll need to take, you have to follow it up with the loan that will actually allow you to purchase your dream home. There are a lot of different loans out there, but for people with poor credit scores it can seem like an uphill battle to secure one. Luckily, you do have options. There are several choices worth looking into if you're trying to find a home loan but have poor credit.
Here are some of the top things to look into if you have a low credit score. These bad credit house loans are well worth considering.
FHA – First, look into FHA loans. These are mortgages that are backed by the federal government and as such they are designed to be easier to qualify for. The intention is to help first time home buyers and home buyers with poor credit, and it's possible to secure one of these loans with a credit score well below the norm – in the low 600s in many cases. They also have a lower down payment requirement, though your down payment will depend on your credit score.
VA – If you're a soldier or a veteran, you might have an even better option available. VA loans are extended to those who served in the military, and they come with low interest rates and low credit score requirements. As such, it's worth looking into them to see if they're right for you. Compare the terms to the FHA loan and you'll be able to determine which is the best choice for you.
Subprime – A subprime mortgage gets a bad rap since it is part of what caused the financial crisis in 2007 and 2008. But today, subprime mortgages remain a viable option for those with bad credit. The key is making sure that you are able to afford the loan that you take out. Subprime is a popular poor credit home loan that are extended to someone who doesn't have the best credit – those who fall below the 'prime' threshold for a loan. The drawback is that the interest rates will be higher than other loans since you'll be viewed as a greater risk of defaulting. Still, these are worth a look and could be your best bet.
There are opportunities out there for those with bad credit, and it's even possible to find second chance financing for people with a past bankruptcy or foreclosure. Just bear in mind that you might not get the greatest interest rates available and that you will have to look at a wide range of options in order to find the best one for you. Of course, the extra effort and the extra interest rates are often worth it at the end of the day. Home ownership is something wonderful, and it's important that even those with poor credit have the opportunity to become a homeowner.