What can I do if I have bad credit?
You may still qualify for a loan, despite credit problems you may have had in the past. In most cases you may qualify for a loan with late payment histories on your credit report, but the lender will want explanations.
You should utilize the free annual credit report and obtain a copy of your credit report at least once per year to check for errors and accuracy of the items being reported. By reviewing your credit each year you can insure you are in a better position to obtain financing for a home. There are many companies that specialize in credit repair that can help for a minimal fee to increase your credit scores also so that you can not only qualify for a home mortgage loan but for a home mortgage loan with a good rate. There are many options available for people with bad credit trying to obtain a home loan.
In some cases a good letter of explanation (LOX) will be accepted by the lender. The letter should explain the circumstances that caused the late payments, foreclosure, etc. If you are borderline eligible for a loan then the LOX may be the fastest way to becoming approved.
Many "Subprime" or "Non Prime" banks grant mortgage loans to home buyers with bad credit. These types of "Sub Prime" mortgages usually carry higher interest rates than Conforming home loans, which are often sold to Fannie Mae and Fredie Mac. Many of the "Nonprime" loans are offered with a 2-year fixed rate followed by adjustable rates for the remaining 28 years. These types of bad credit home loans are designed to help poor credit home buyers purchase homes, rebuild or repair their credit profiles during the 2 years fixed rate period, and refinance into a Conforming mortgage with better interest rates and terms.
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