Home ownership is a need that most Americans strive for. And that is why you are reading this. You are someone who is looking to buy their very own house but are worried about your bad credit. No need to worry as there are many bad credit loan options available that can help with this problem. Being able to buy your own house should neither be a luxury nor a dream. Therefore, do not let your credit history stop you from achieving your dream of becoming a home owner.
What is Bad Credit Loan?
The first step of getting your Dream house is by procuring a loan. Bad credit loans are for those who do not meet the requirements for traditional mortgages. The reason for ineligibility is poor credit ratings. But when one door closes another opens, which is the same in this case. Bad score can be a blessing in disguise, as it helps you procure a bad credit loan, even if they come with higher interest rates.
Types of Bad Credit Loan:
Procuring a loan requires providing necessary documentation and other details to the lenders. In America, you have many bad credit loan options to choose from. Choosing the correct loan options can help lower the interest rate.
1. The Federal Housing Administration (FHA) Loans:
There are two ways by which you can qualify for a loan through the Federal Housing Administration (FHA). If you have a credit score of 500 or above and able to put down 10% of the loan amount, you can easily procure this loan. Another option is if you have 580 credit score then you can get the loan if you pay about 3.5% down payment upfront. As FHA loans are government issued, lenders are more willing to give you a loan despite bad credit score. Before you decide to go with this option of bad credit loan, you should consult Dream Home Mortgage. There expert advice will have help you navigate the up and downs of the real estate market.
2. Veteran Affairs Loans:
If you are someone who is currently serving in the US Army or have previously served in the past, then you are eligible for a Veteran Affairs (VA) loan. The best aspect of procuring a VA loan is that your credit history doesn’t matter a lot but having a minimum of 620 credit score will help increase your chances of getting it sooner. If you are someone who is a qualified buyers and this isn’t your first rodeo, then VA loans are a great fit for you. Because despite having bad credit score, you don’t need to pay a down payment. The cherry on top is that you also will be exempted from private mortgage insurance (PMI).
3. USDA Loans:
A home in the countryside is a tempting offer for many. As city life is becoming more hectic and crowded day by day, many buyers are looking for a place to settle in the rural areas of the US. There are many added benefits when buying a house in the rural areas as it comes with added perks during bad credit loan procurement. The United States Department of Agriculture (USDA) loans cater to those buyers who not only suffer from bad credit score but also hail from low-income backgrounds. When you are applying for a USDA loan you must at least have a 640 or above credit score but there are even exceptions in this criterion. The added perk such as no down payment and competitive rates make these loans very captivating. With 100% financing, the USDA loans are perfect for anyone who is living or is planning on living in the rural or suburban areas of the US.
4. Subprime Loans:
This type of bad credit loan is given by private lenders to those buyers who have poor credit score. But you have to understand that due to low credit score lenders are more cautious when they lend the loan. Therefore, this type of loan comes with higher interest rates and costs as to appease the lenders. So, this loan should be considered if you are ineligible for conventional, FHA, VA, or USDA loans.
5. Rent-to-Own Option:
If you are someone who is willing to pay rent while building a good down payment then rent-to-own is a great option for you. This is a great option if you have bad credit score but are able to improve it over time, then this a viable option. There are many house owners who are willing to draw a contract which allows you to rent their property with the intent of buying this. This is a good option for both parties involved as they benefit from this arrangement. A portion of your rent is contributed towards buying price of the house that allows you to take custody after a certain period of time.
Conclusion:
Do not let bad credit score hinder your dream of becoming the owner of your Dream house. With many viable bad credit loan options such as FHA, VA, USDA, subprime loans, and rent-to-own agreements, your dream can finally become a reality. Each loan options cater to your different needs and help you move closer to home ownership. Now before you begin your journey, you need an expert in your corner, who will guide you through the perilous world of real estate.
Therefore, consult with experts like Dream Home Mortgage for professional advice and support. They can guide you through the complexities of bad credit loan and ensure you make informed decisions. So, what are you waiting for? Unlock the doors of your Dream house today by giving them a call.
