You may think that having bad credit will keep you from owning a home, but your credit situation doesn’t necessarily have to dampen your dream of owning a home. Think about it. In today’s economic realities, many people have struggled with some bad results on their credit histories. And all of these people still have longings and yearnings just like those who have somehow managed to maintain their good credit ratings. Recognizing this untapped market, lenders have stepped up and designed bad credit home loans.

Engineering Loans

These bad credit home loans do not place as much importance on your credit rating as regular mortgages. They will be more interested in your debt-to-income ratio. They will want to know exactly how much you have left over each month after meeting all your necessary obligations, such as utilities, life and health insurance, along with other necessities, and they will look to see if you have been responsible enough or not. Have a savings account as well as an emergency fund. Many lenders will also want to have a down payment. This could require a sum of 10-20% of the cost of the loan. You can find bad credit home loans that require no down payment, but their interest rates will be significantly higher.

Pre-approval test

If you’re really unsure of your qualifications, you may want to get pre-qualified for a home loan. This does not require a commitment to the specific lender from whom you are pre-approving. But it will identify any credit problems, reveal how much money you can really afford to spend on a home, and show all lenders that you are serious about homeownership. This is good proof of qualification even for buyers with excellent credit. When a real estate agent or homeowner asks you about your financing, it lends itself a lot to their conversation to negotiate when you can say you’re pre-approved for a mortgage. Having a buyer with cash practically on hand really brings the pot to a boil.

Finding a bad credit home loan lender

If you have a longstanding relationship with a bank or credit union, if you have had accounts with them for a considerable period of time, and especially if you have retirement or investment accounts with them, ask them there first, their interest rates they will be lower, if you can qualify. If that is not the case, your best option would be to search for suitable lenders on the Internet. Simply enter the key phrase in your web browser: Bad credit home loan. You will be introduced to a number of lenders willing to offer you the opportunity to obtain a bad credit home loan. You’ll even find brokers who will take your preliminary personal and financial information and come up with a list of lenders who are likely to approve a bad credit home loan based on the information you’ve provided.

Other considerations about home loans with bad credit

When you’ve narrowed the field down to four or five lenders who seem to work with you, check their credentials. A good place to start would be to check the Better Business Bureau’s online listings. There you will find the qualified companies and the comments of former customers. You can also check personal finance forums to see if you can learn more about the lender from past clients. At this point, if it’s possible given your credit score and salary, you may want to borrow a little more than the cost of the loan to buy a new car or start some home renovations right away. With the expanding market for people with bad credit, you may be surprised at some of the deals you can get.