Banks and credit unions are the conventional source of finances. They offer loans with interests that are easy to reach. But mostly, these loans are secured with mortgages such as real estates and chattels. Aside from this, you have to qualify on their required credit score. Online lenders have been offering loans for people with bad credit to answer your financial needs when the traditional financers cannot. These loans may or may not come with security depending on your needs and their programs.
Different Types of Housing Loans
Your credit score is your advantage when you apply for larger loans such as to finance your house purchase. Unfortunately, when your credit score is below 640, you are deemed as a high-risk borrower and those banks or credit unions will decline your application outright. Trusted lending companies or online lenders are both offering loans for people with bad credit including housing loans.
The Federal Housing Authority caters to people with bad credit. Its down payment requirement may settle at 20%. Also, the choices of homes vary between brand new homes or otherwise. They also offer re-financing of your home.
On the other hand, lending companies are more flexible in offering home loans for people with bad credit. But you have to find the best broker to help you process the loan at a favourable interest rate and with a flexible payment option. If you want your interest rate to be fixed no matter how the economy treads, mortgages with a fixed rate is your best option. This means that either the economy is doing well or not, your interest rate is already unalterable.
Another good option in looking for housing loans for people with bad credit is the Adjustable Rate Mortgage (ARM). This program is available when your credit score is poor. Its interest rates as well as the starting monthly dues are lower.
Filing for Bankruptcy
Even if you have filed for bankruptcy, you can still apply for loans for people with bad credit. In fact, there are advantages when you filed for bankruptcy and one of them is the chance to start anew. Lending companies whether online or offline are willing to offer you such chance. And since you are starting a new phase, you cannot be associated with debts. Six months from filing your bankruptcy, you can apply for a loan both from the banks or credit unions and other lending companies.
If you want a faster home loan processing, try the seller financing program. This loan requires no credit check, flexible payment options, longer terms, and lower interest rates.
Getting a Co-Signer
If filing a bankruptcy is not attractive to you, you can still get loans for people with bad credit at lower interest rates. One way to do this is by finding a reliable and willing co-maker or co-signer in your loan application. However, this co-signer of yours should have a good credit score to compensate your bad credit. A relative or a family member can be your co-signer.