We hear nearly everyday how important it is to maintain a good credit score. High credit scores can mean good financing terms where as low credit scores can mean high interest rates or no financing at all. When we leave school, most of us rent our first homes. From there we hope to buy a home of our own. In this article we will look at how people can still purchase homes with low credit and even bankruptcy on their reports.
Bad credit and bankruptcy can make thing much more difficult when it comes to purchasing a home. However, it doesn’t make them impossible. The key is knowing when to apply and demonstrating that you are a reformed character as far as your fiancés are concerned. Bankruptcy does have long term effects. The term between filing is seven years but it can adversely affect your credit rating for up to 10 years.
There are options however. FHA loans are available for those that are on low incomes or have a bad credit history. They will loan money with as little as two years passing after a foreclosure or filing for bankruptcy. They also ask for as little as 3% as a down payment. Individual circumstances will apply but they are a very viable option.
If you maintain a credit score of at least 580 after an expectable period of time, then sub-prime lenders are an option. They will many times offer 100 percent financing on the home but the rates will be higher than if you went with a standard lender.
Finally, there are hard money lenders. These will make fund available with as little as 6 months passing after bankruptcy. However, they will quite often want 25%-35% down payment and will have high rates of interest. These rates are adjustable over time. If you maintain consistent payment then they will start to come down.
Bad credit and bankruptcy are things that we all want to avoid. However, if it should happen then remember it isn’t the end of the world. With some effort you can get financing for a home. It may cost more but in the end it could be worth it.