Getting a new home loan isn’t like walking into a 7-Eleven to buy a slurpee. Buying a new home takes persistence, work, and some smart planning. Planning to buy a home can take a few years, but you can really short-cut the process if you understand what’s going to have to happen to buy a home. I wanted to create a small resource that can help you with this process.

The first thing you need to do is gain employment. Obviously if you already have a job you’re taken care of in this area. Sometimes, however, people have some money because of an inheritence or rich parent and they try to get a home loan. This really complicates the process because most lenders want long term security.

Make sure to file your taxes. You generally will need both pay stubs and tax returns to qualify for a new home mortgage loan. This wasn’t the case a short two years ago but banks have really tightened up in today’s economic environment. There was a huge amount of fraud that went down during the last real estate bull run and it caused a lot of problems.

Save some money. The most liberal loan out there right now is the FHA loan and you will still need to save 3.5% for a down payment. The days of 100% financing are gone for now and probably won’t be back for at least a few years. If you can’t qualify for an FHA loan you will likely have to pay somewhere between 5-10% for your down payment.

Fix your credit now. The biggest thing that can be done to improve credit is paying off your credit cards completely. When you carry a high balance it can really affect your credit score. The amount of debt you carry on credit accounts can affect your score by as much as 255 points. Yikes!

New home purchase loans really aren’t much different than other mortgage loans. The bank really doesn’t care whether the home is brand new or a few years old. The most important thing to the bank is the value of the home.

There are a lot of people who are going to want to shortcut this process but that isn’t wise. You shouldn’t be buying a home if you don’t have a down payment. You shouldn’t be buying a home if you don’t have a job. You should take the time to plan so that you can stay in your home without running into trouble.

At one point or another, almost everyone needs a home loan. If you have a solid income and good credit, finding a home loan is really easy. However, finding home loans for people with bad credit isn’t nearly as easy. Obviously, a bank is taking on a lot more risk by providing bad credit home mortgage loans. That means they will probably be more hesitant in providing you with a loan. That said, there are plenty of options out there for individuals that have bad credit.

About Bad Credit Home Loans

Bad credit home loans are generally provided for people that have credit scores under 620. If you have a credit score above 620, you probably don’t need to be looking for home loans with bad credit. If your credit score is above 620, the only thing that will force you to get a loan like this is if you have late payments on a current mortgage loan.

Two Types of Home Loans For People With Bad Credit

The first type of home loans bad credit are bad credit mortgage loans. These loans obviously are for people that are trying to buy homes. Since loans carry higher interest rates for people that have bad credit, these loans usually carry interest rates that are about 10% annually. Your interest rate is going to vary depending on your exact credit score and history. These loans are sometimes referred to as bad credit new home loans. If you want to buy a house with bad credit, these are obviously the loans for you.

The second type of bad credit home loans are home equity loans with bad credit. These are intended for people that already have homes and mortgage loans. Traditionally, people take out home equity loans when they need extra cash. These loans are generally only available for people that already have equity built into the house. People sometimes take out these loans to cover expenses or sometimes to make investments or start businesses. You don’t buy a home with these loans, you simply use your home as collateral.

Qualifying for Home Loans With Bad Credit

The best thing you can do if you want to know if you can qualify for a home loan is to walk into a bank to ask. Additionally, you can go to an online loan shop and apply. You can then talk to a professional loan officer who can tell you whether you can or can not qualify.

If you’re not able to qualify for bad credit home loans on your own, you may have to go through the process of finding a cosigner. This may be somewhat embarrassing, but it will at least get you into a new home. If you’re not able to find someone to cosign, you may need to wait for a while so that you can improve your credit score.

Stop Wasting Time When You Aren’t Qualified

One of the saddest things I see is when people spend months and months and months trying to qualify for loans that they have no business getting. Not everyone will be able to take out a home loan. People often ask me if no credit check home loans exist – they don’t. No one is going to lend you a few hundred thousand dollars without checking what kind of risks you pose. If you want to buy a home, you need to start taking care of your credit now.