Bad
Credit History? How Financing And Buying A Home Can Help You Improve Your
Financial Situation
By Carrie Reeder
Financing and buying a home can help improve your
financial situations, especially if you have a bad credit history. Adding
a mortgage payment to your monthly expenses seems like a mistake if you
are having financial difficulties, but in the long run a mortgage can
save you money on your living expenses.
Raise Your Credit Score
Regular payments made on a loan-term loan, such
as a mortgage, are weighted more heavily by financial institutions that
regular credit card payments. Within three years of regular payments,
you can raise your poor credit rating to good and qualify for lower interest
rates on all your loans.
So while you will probably have to finance your
mortgage with a sub prime lender if you have poor credit, you can expect
to refinance your loan for better rates in about three years.
Investment For The Future
Paying rent is simply making someone else richer.
For the same amount you are paying on rent, you can be making a house
payment and investing in your future. You will be building equity through
your monthly payments and rising real estate prices.
Your home's equity is a financial safety net that
you can tap into for future emergencies. With its interest written off
on your taxes, this line of credit is better than using a credit card.
You can also use the equity as part of a retirement plan by down-sizing
your home in the future.
Reduce Future Living Expenses
Unlike rent, your mortgage payment won't fluctuate,
unless you opt for an
adjustable rate mortgage. So while your paycheck will increase with each
pay raise, your mortgage payment will be taking a smaller chunk of your
paycheck. And once your mortgage is paid off, then you will really see
a reduction in your living expenses.
Create Wealth
If you are really ambitious, you can also create
wealth through purchasing and renovating a house. Often times a little
bit of sweat-equity can have big payoffs. You can then sell the house
and purchase another house to renovate. This hard-work process is best
for those willing to put a lot of time and effort into a project.
About the Author: Carrie Reeder is the owner of
http://www.abcloanguide.com,
an informational website about various types of loans. To view our list
of recommended bad credit mortgage lenders online, visit this page: http://www.abcloanguide.com/lessthanperfectcredit.shtml
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