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.

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.

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. Please call at 269-729-4454 or email at info@approvedmyloan.com to find out how much you qualify for based on your current credit.

Bad Credit Home Loans - A bad credit home loan, is a loan for someone who has had some problems with their credit in the recent history.

Generally speaking the lower your credit scores, the higher your interest rate will be. In addition having a lower credit score may also affect how much of a loan, or how high of an LTV (Loan to Value) your mortgage lender will let you qualify for.

Example: A person with a 600 credit score may be able to qualify for 100% financing at a 7% rate while a 510 credit score may only be able to qualify for 85% financing at a 8.5% rate.

Therefore, you can see the importance of trying to keep your credit score high and the potential savings you can obtain by working hard to raise your credit scores.

It is a good idea to try to improve your credit score before applying for a mortgage. The difference in interest rate will literally save you thousands. If you have known credit issues, I may be able to help you resolve them, or refer you to a reliable credit repair company that can. Call me at 269-729-4454 for more information.

If you have bad credit in addition to a higher interest rate, you may also get a loan with a pre-payment penalty and/or more points on your loan.

A common strategy for borrowers with poor credit is to get a 2 year ARM. The rate is fixed for the first two years which gives you time to imporve your credit, and show a history of timely payments. After the two years if your credit has improved you can refinance into a more traditional fixed rate loan at a lower rate.

Home buyers with bad credit background should expect to pay higher interest rates than those with good credit. Lenders charge higher rates because the default risks with poor credit home loans are higher.

Higher interest rate loans for those with bad credit are a good short term fix. They can allow you to stay in your home while doing the things needed to repair your credit. Then in 2 or 3 years you can refinance to a much lower rate.

There are many different programs for credit troubled buyers. You may still be able to get 100% financing but be prepared for higher interest rates.

Its important to learn to avoid the habits that caused poor credit to begin with. Ask your preferred Mortgage Professional which items on your credit history are most damaging to your FICO. It takes time to turn bad credit around, but the results will save you thousands on your next home loan.