Excellent credit is not required to buy a home. Of course, a higher
rating will qualify homebuyers for a low rate and better loan programs.
Still, buying a home after bankruptcy is easy. Although home loans
following a bankruptcy discharge come with high rates, a home purchase is a
great way to quickly boost a low credit rating. Here are a few tips on
getting a low credit score mortgage loan.
Sub Prime Mortgage Loan Programs
There are many options available to homebuyers with a low credit
rating. Credit scores below 680 do not qualify for prime home loans. Hence,
these persons will need to speak with a sub prime mortgage broker or
lender. Sub prime loans are intended to assist those who cannot obtain
traditional mortgage financing. These lenders work with all types of
people and credit situations. Furthermore, sub prime lenders have a
multitude of different loan options.
Who Qualifies for a Sub Prim Mortgage Loan?
Anyone with a low credit score can get approved for a sub prime
mortgage loan. However, there are certain limitations. Many lenders will not
approve a mortgage loan if the borrower's credit score is below 500. In
this instance, the risks are too high. Homebuyers who fall into this
group may consider improving their credit before applying for a home
loan.
Having a chapter 7 bankruptcy, collection accounts, and judgments will
not disqualify a buyer from obtaining a sub prime mortgage loan.
Naturally, loans of this sort have higher interest rates. However, if the
homebuyer maintains a good payment history, they will have the option of
refinancing for a better rate in the future.
Other Loan Options Available after Bankruptcy
As mentioned, sub prime mortgage lenders offer a range of home loans
for every need. Following a bankruptcy discharge, homebuyers have the
option of obtaining a no credit score home loan. Because lenders do not
offer 100% financing on these loans, buyers must be prepared to pay a
20% down payment.
Another loan option available is the zero down home loan. This loan is
offered to buyers with good and bad credit. Zero down home loans
include 100% financing, which is perfect for first time homebuyers and buyers
with little cash savings. To qualify for a no money down home loan with
bad credit, your credit score cannot fall below 580.
View our Recommended Lenders For Buying a Home After Bankruptcy.
Also, view our recommended sources for a free Trans Union, Experian and Equifax credit report.
