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Bad Credit Home Loan Secrets
by Anonymous

February 12, 2004--The secret of getting a home loan with bad credit is to try. Most people report that because they cannot qualify for a credit card or car loan because of bad credit, they presume they will be declined for a home loan because of bad credit. We find that this is untrue, in fact the opposite is true: it is easier to qualify for a home loan with bad credit than car loan or major credit card.

The top 3 reasons people with bad credit believe they will not qualify for a home loan:
1 The amount of the loan. If they cannot even be approved for a $5,000 credit card, how can they be approved for a $250,000 home mortgage?

2 The application process is complex. If the simple credit card application that requires no documentation results in disqualification, how can the complex home mortgage application possibly be approved?

3 The emotional nature of the purchase. The purchase of a home represents a huge emotional step for many people and the prospect of rejection keeps many people from even attempting to qualify.

Ironically these are the very three reasons people with bad credit qualify for home loans.

Home loans are secured by real estate: Real Estate is considered very secure collateral. Because of this, mortgage lenders are more comfortable making home loans to people with bad credit then unsecured credit lines, credit cards, or a vehicle that depreciates every day. Because of the size of the loan there are thousands of institutions that can make money servicing the loan and investors seek real estate based security resulting in a competitive marketplace that contains thousands of home loan programs attempting to meet the needs of every potential borrower.

The complex home loan application enables lenders to look beyond the individual's credit rating and take into account factors such as your job security, debt to income ratio, value of the property and ability to make the monthly payment. The consumer credit report represents a lesser role in mortgage approval.

The emotional nature of the collateral adds security to the lender. The mortgage payment is proven to be the first priority when it comes to making monthly payments. Statistics show that people will beg and borrow to keep their home as opposed to unsecured credit cards that once delinquent have a relatively high likelihood of being charged off.

With the variety of home loan programs available to consumers, we find that if a consumer wants to purchase or refinance a home they should contact a lender or broker that specializes in bad credit home loans. The professionals we consulted were extremely knowledgeable and more than willing to explain the process. Those people who did not qualify for home loan left with a clear understanding of what they could do over the next few months to qualify for a home loan that meets their needs.

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