Since the recession hit many families have struggled to make ends meet. Layoffs and unemployment have left families in financially impossible situations. Where they bought a home counting on two incomes - now maybe they have one. For many of those that have kept their jobs the recession has meant fewer hours and lower pay. According to data being released in the Economic Policy Institute, "The State of Working America, 12th Edition" after adjusting for inflation the average worker is made less per hour in 2011 than in 2001. With inflation and health care cost rising by thousands per family even those with steady jobs have felt the financial burn of the recession. This has left many, hard working, upstanding people in a situation where they have been unable to meet all of their obligations. Things like paying a credit card on time don't seem important with the utility bill to pay.
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Under these circumstances Americans all over the country have seen their credit score decrease. Seeing your score go from a 690 to a 580 is discouraging and may leave many homeowners or potential home buyers feeling trapped - like there is no way to refinance with bad credit or buy a home. What many people don't know is that there are mortgage loan options available for people that have struggled and as a result - have bad credit.
If you are looking for a home loan with bad credit an experienced mortgage lender can help. It is important to work with someone that has experience in the industry and a mortgage broker (vs. a bank) may be able to provide you with more options since they can issue loans from multiple lenders. Some mortgage brokers offer bad credit home loans for people with scores as low as 500.
Remember your credit is a reflection of your past. What you need is a mortgage lender willing to work with you by looking at your current situation - employment, recent payment history etc. It is important to note that having bad credit in the past does not dictate your future. You need to make a choice to pay your bills on time going forward. It is much more difficult for a lender to provide you with a home loan for bad credit if you continue to pay your debts late. If you are considering refinancing or purchasing focus on your payment history going forward.
Bad Credit FHA Loans
FHA also offers mortgage loans for people with bad credit. Their loan programs are available for people with a score of 560 or higher. Borrowers must have a 12 month rental or mortgage history, have at least three trade lines (credit card, student loan, auto loan etc) that have a 12 month history, and all judgments must be paid. If you need help establishing an additional trade line consider opening a department store card. Even though the balance is typically low it will start to build your credit history.
Whether your family has gone through hard times or you are newly establishing your credit there is hope for those with low scores. Bad credit home loans are available for refinancing or purchasing a home. Contact a mortgage lender to determine if you qualify and if not what you need to do to improve your situation. Sometimes it is the simple steps like opening an additional card or paying off a collection that make a large difference in your credit situation.
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