January 16, 2018

What to Expect When Applying for a Home Loan with Bad Credit

so you want to buy a home and apply for a loan. the problem is that you have bad credit. you might feel like you might not stand a chance. there is hope however. the key is to manage expectations in applying or that home loan.bad credit home loans

  • it’s going to be tough– you cannot just walk in the bank and expect to be catered to like a valued customer. the fact is, you have bad credit and might be turned down countless times. some give up right away and not push on. they just walk away instead of negotiating. remember that there are lenders that may offer a hand albeit with a price.
  • it’s going to be expensive-we are talking here o high interest rates that will come with the loan. with your bad credit score, you will most probably be served a higher than the average interest rate.  the reason for this is you are a credit risk and possibly default in the loan. banks would want to earn money on the loan and would have to balance the risks and rewards. therefore, expect higher interest rates.
  • not level playing field-had you been a customer with an excellent credit score, you will be given a lot of advantages. however, with your handicap, expect unfavorable terms like adjustable rate mortgage and balloon mortgage. these are risky forms of loans if you are not prepared.

now that you know the trade-offs of having a bad credit, find some remedies to fix your bad credit. the next time you need a loan for something else, you will have an even hand.

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