By Lindsy Emery

The type of credit history you have determines a lot of things in your life: the most important of which is the type of home mortgage loan that you qualify for. Most people conscientiously spend months or even years building up a solid credit history so that they qualify for the best possible mortgage loan. But what happens if you’ve got a bankruptcy or previous foreclosure in your history, or bad credit for some other reason? Then you’ll definitely need to look into bad credit home loans.

Bad credit home loans are loans designed for buyers with low credit scores, typically below 620. At this threshold it’s not impossible to get a loan, but it’s decidedly more difficult. Traditional lenders who don’t offer special bad credit home loans may not approve you for a loan. But special poor credit mortgage loans are an option.

Traditionally they carry a higher interest rate than the average loan, mitigating the lender’s risk. Even if you’re a very dependable person who would never dream of defaulting on your monthly mortgage payments, lenders generally see a low credit score as an indication that lending to you may be risky for them.

Is it worth it to apply for a bad credit mortgage loan, even if the interest rate is high? In most cases, it certainly is. Owning a home is the biggest asset that you will ever have in life. Unlike other major purchases like furniture, appliances, or cars, a house is guaranteed to appreciate in value. Renting really is just throwing money out the window, whereas home ownership is like putting monthly deposits in the bank over a period of 30 years. If you can afford to make mortgage payments, then it’s always a smart move to own a home. The interest rates may be high, but you can work on improving your credit over the next several years and see if you qualify for a more cost-effective refinance.

Of course a credit score is an all-important number when you’re buying a home, and there’s no such thing as a no-credit-check mortgage. But having poor credit history doesn’t have to prevent you from home ownership. There are special loans for even those who don’t qualify for traditional loans because of their credit. The best thing to do is ask around with several lenders about bad credit mortgage loans in specific to see what they have to offer.

By Emiel L.

Admit it: everyone wants to have a house – a really nice house where you can just crash after a long day at work or where your kids can safely grow up and have a great time creating memories. Unfortunately, having a “nice” house these days means coughing up about $100,000 as down payment for the property. And that still does not include the rest of the house’s cost, taxes, loan interests and other incidental expenses like the cost of hiring a moving crew, transporting your entire family to the location, getting new furniture, etc. Assuredly so, many people do not actually find scraping together that much money as a very easy thing to do. Instead of giving up your dream house as a lost cause, you may want to look into no money down home loans.

As the name suggests, the no money down home loans are lending schemes wherein you can acquire your very own property without putting up a large amount of cash as down payment. Some loans can be acquired without any money down option at all, while others require other sorts of compensations like a 2% to 5% down payment, or a loan that pays off at 102% to 105%. As such, there are different types of these aforementioned loans. The most notable and popular of these include: the Veterans Affairs or VA home loans, VA foreclosure, seller assisted closing loans and direct lease-purchase transactions, among many others.

Veterans Affairs or VA home loans is usually offered to members of the Army, Coast Guard, Eligible Service and the National Guards, both for its active and retired service people. VA foreclosures are properties being placed back into the market and can be gained by people outside the military services.

Seller assisted closing loans work around the principle of direct transaction. A home seller and the buyer will agree on a set amount for the property. The buyer can then offer to pay the supposed down payment (around $5,000) at the closing of the deal.

Lastly, lease purchase transactions work around the principle of most rent-to-own properties. The house seller will set a price which should be payable on a future date. In the meantime, the house buyer agrees to pay for a fixed monthly “rent” or “lease” price.

As such, there are lending institutions that offer or specialize in such loans. However, in order to safeguard your money and your new home, it would be best to seek financial aid from lending institutions that are known to be reliable like Countrywide (private lender,) Federal Housing Administration (government program,) and the Department of Veterans Affairs loan program (another government program.)

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