Bad Credit Home Loans

If you are in the market to get a bad credit home loan, it's not all that difficult. During this current recession majority of people have been through credit problems and many life-changing alterations.

Lending for bad credit home loans has dramatically changed since 2005 when the real estate market peaked and the subsequently declined that resulted in complete mortgage meltdown that saw major Wall Street firms going belly up.

Bad credit home loans are generally provided to people with credit scores below 620. If you have credit scores above 620 you can qualify for Fannie Mae and Freddie Mac loans and other prime type home loans.

Home Loans For People With Bad Credit

About 80% of US population has some kind of bad credit remark on their credit, hence there are still many options for people with bad credit. These loans are known as bad credit mortgage loans. If you are purchasing a home this will apply to you. Usually these bad credit home mortgage loans are 80% loan to value with 20% down payment. They carry a slightly higher interest rates about 8% to 10% on the average. You particular interest rate depends and varies with your exact credit scores. The minimum credit scores have to be at least 560 or 540 in some instances.

The other types of bad credit homes loans are FHA or HUD loans. These loans usually require 600 fico scores and are provided with the help of Federal Home loans program with a 3.25 % down payment. They are fully documented loans provided by regular Banks and mortgage companies with the backing of mortgage insurance provided by Government. These are excellent home loans for people with bad credit.

Refinancing bad credit home loans

These are loans designed for homeowners with credit scores below 620. If you have sufficient equity built up in your home you may refinance for bad credit home loan. These are all fully documented loans and can be fixed or variable.

Bad credit home loans- how to qualify

First thing you need to take a look at your credit report. You credit report should give you at least 3 credit scores. It is usually advisable to contact a bad credit mortgage company and get yourself pre-qualified. The process is simple shouldn't take more than 1-2 days.

Once you are pre-qualified ask your loan officer to get you pre-approved. This involves submitting your loan to their investors and getting conditions of the loan with full underwriting criteria. It does not require an appraisal or title report.

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In today's bad credit home loan environment it is essential that you are pre-approved at least and only than you should even try to make offer for the purchase. The pre-approval process applies both for refinance with bad credit and also for purchases.

If you are for some reason unable to get pre-approved, you should immediately contact a credit repair specialist and try to clean up your credit profile. Your credit profile is the single most pivotal point in your loan and with time it can be improved – where a bad credit home loan is possible.