San Diego, CA (PRWEB) May 24, 2014
LoanLove.com recently released a guide to home loan options for borrowers with bad credit scores. The past years have been hard on many people, making a perfect credit rating something that a lot of people have not seen in a very long time, if ever. This new guide can help those who have damaged credit to find home loan options with reasonable interest rates so that they can realize their dreams of homeownership and work on repairing their credit situation.
This new guide titled “Low Interest Rate Loans For Bad Credit Borrowers (You’re NOT Out Of Luck)” acknowledges that not all those with bad credit have gotten into their current situation due to poor use of credit or unwise financial decisions. Many unforeseeable misfortunes could cause a person to lose points on their credit rating, including such things as divorce, medical bills or other life circumstances. Luckily for those who have found themselves in this situation, there are still good low interest loans available for borrowers with bad credit.
Loan Love continues to explain why a credit score is so important and gives a list of the different levels that credit scores are rated by; from excellent (750 or above) to bad (under 600). The article explains that the first thing that those who are seeking a home loan should do is to do all that is in their power to improve their credit scores. While the most effective way to cure a bad credit score is consistently paying off debt and using credit wisely, there are many “quick-fixes” that any one who is considering buying a house should undertake, and especially those who know that they have a poor credit rating.
The article then goes on to review some of the better loan options that are available to those with poor credit, in particular the FHA loan program. The article says, “The Federal Housing Administration’s loan program is the most common loan product available for prospective borrowers with credit scores on the low side. This type of loan is insured by FHA to protect against potential loan default. It requires a minimum credit score of 580 with a down payment of 3.5 percent. While that may sound good, keep in mind that despite FHA’s requirements, most lenders will still want a credit score of 620 to 640 minimum for FHA loan approval. You will also be asked to supply documentation of your income and assets. The lender will use these to determine if you meet debt-to-income ratio requirements, which typically call for a maximum of 41 to 43 percent of your monthly gross income applied as the minimum payments on all your revolving and installment debts.”
Loan Love goes on to talk about some disadvantages to this loan program for borrowers with low credit scores, and ends by talking about programs for special challenges. The guide says, “Even borrowers with significant credit blemishes, like short sale or bankruptcy, may be able to meet requirements for getting a mortgage. FHA’s “Back to Work” program allows borrowers to reduce the waiting period to qualify for a home loan. There are certain requirements to quality, such as receiving financial counseling. You lender should be able to point you in the right direction to determine if you could qualify.”
For more information regarding these loan programs for borrowers with bad credit, click here to view the full guide at LoanLove.com.