They say that if you need a home loan, you better have good credit standing. Without this, the chances for you to buy a new home are slim to none. That is the most common advice given by financial experts. Is that true? For the most part, it may be true. However, it is not impossible to buy a home when you have bad credit.
Let us explore the best ways to refinance.
Bankruptcy
If you are out of funds for a long time, the worst thing you can do to yourself is get further into debt. The wisest choice is to talk to an attorney for bankruptcy here, apply for bankruptcy, and start afresh. This allows you to get rid of all your debt and opens up the doors for more opportunities. This also includes buying a new home. Remember that it doesn't increase your credit score, but it can help you to get more loans.
Riders
As good as this may sound, it is not always that rosy. When you apply for a new loan after bankruptcy, the terms become tougher for you because the risk for your lenders increases. For example, your home mortgage loan rates will be high when compared to people applying for regular loans. Also, the down payment for the loans may be as high as 20 - 35%. In general, the terms of the loan will favor the lender more.
That doesn't however mean that you cannot get loans at reasonable terms for your new home. Here are a few ways to achieve better results
Wait
When you file for bankruptcy, don’t immediately apply for a new loan for anything, be it for your home or any other reason. If you are patient and can wait for 3-4 years before buying, you will find home loan rates to be considerably lower. That is because lenders assume that as time goes on, your financial situation improves, and thus you are less of a risk for them.
Credit card
Make sure that you have a steady and consistent employment record after bankruptcy. This gives lenders the confidence that you will repay the loan on time and be a source of profit for them.
Read also: Online credit repair-best option for availing services
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