Maybe you are at a turning point in your life where you have made enough bad mistakes, especially with your finances, that you are starting to learn from them. If you’re lucky, then you already have benefited from them; if not, it may take a little bit of trial and error. If you have applied for a loan with bad credit and you have been turned away, you may not realize how easy it is to get a loan anyway; it just depends on what you are willing to pay for it up front.
Getting a mortgage when you have bad credit is not the most difficult thing in the world, but it means that you will be making some small sacrifices.
One of the best ways to get a mortgage after having some substantial difficulties regarding your finances, and more importantly your credit score, is to get FHA approval. These mortgages are not usually available to people with bad credit because they usually run the investor a higher chance of not returning that money.
The FHA does not directly lend money, but it provides the bank or investor with what can be loosely described as a ‘guarantee that you will pay them back.’ In the eyes of the investor, this makes it easier for them to give you a loan because they feel much safer.
Another alternative to seeking FHA approval is to find alternative lenders. This is a pretty basic one, but you never know; not only can you find different investors for your loan, but you can also try different types of loans (because there are many different kinds out there) and you might even get a better rate or two on them!
However, not all is well and good. You need to be very careful here. These kinds of lenders are in a great position to snatch up and capitalize (quite literally, as a matter of fact) on a desperate consumer that needs a loan. Be on the lookout for various types of marketing and loan scams, and be sure to thoroughly investigate the reputation of whoever you are looking to get a loan from.
It also helps if you can speak with a couple of customers that have either fulfilled their loan term or are in the process of doing so. This strategy helps you to be sure whether or not they are a safe investor.
As previously mentioned, taking out a loan with a bad credit score can be very, very expensive. If you are desperate enough to need to do it, it is a good idea to make it as temporary as possible and to move onto a more conventional and traditional loan if you can.
Now, this does not mean you have to get a concise term loan, of course, but it does mean that you should keep it in your mind that you should pay for it as soon as possible. You do not want to be dragging this out, as it lowers your credit score, especially if you miss payments. Not to mention that the longer and longer you drag it out, your credit score goes down, but the fees and the interest rates go up!
All in all, we think that you should not even attempt to take out a loan on a weak credit score unless it is necessary. It does not pay in the long run to have owed so much money, and in some cases, it can put you in an even tighter situation than you were previously.