If you're thinking about buying a home but have declared bankruptcy in the past, don't give up hope. There are still ways for you to be able to find a loan, even if your credit history is less than sterling.
Lenders make various kinds of home loans, normally graded from "A" all the way down to "D." The more problems that show up on your credit report--slow pays, late pays, or even bankruptcy--the lower the grade of loan you'll be able to qualify for. If you're employed and have a relatively good income, you'll get better terms, even though you won't qualify for a "Grade A" loan. The longer you've been at your current job, the better, because it shows stability.
Here are some general rules about the qualifications lenders look for before giving consumers the various grades of home loans:
To qualify for an AA loan, lenders must see no late payments or any other difficulties when they look at your credit history for the past two years. First, we'll look at the top of the line loans, all in the A grade category.
To qualify for an A+ loan, you can only have one late payment in that two-year time period. An A- loan is available to borrowers whose credit report shows two or three late payments, and have at least two credit cards. Borrowers in the A category will normally be qualified for all the various perks that lenders offer, such as low interest loans and low down payments.
But if you've had a bankruptcy in the past, you're choices are more limited, and you'll generally need a larger down payment.
For instance, a grade B loan can be obtained by borrowers who've been at their jobs for a reasonable length of time in as little as 18 months after declaring bankruptcy, assuming that they've been able to reopen at least one line of credit during that time and kept it current. Usually the lender will require 15% down, and the best interest rate the borrower can generally get is 6-7%.
A grade C loan will require good, steady employment, and may be available within a similar time frame as a B grade loan. The interest rate is generally higher, currently at about 8.5%, and the down payment requirements are considerably higher. For instance, a lender will normally require 20% down on $300,000 house or 40% down on a $500,000 home.
You'll need a significant amount of down payment to qualify for a grade D home loan, as well, and the interest rate will normally run between 9.95-10.7%, depending on your overall credit score. If you're employed and your credit score is above 500, you can put down as little as 30% on a $300,000 home or 45% on a $450,000 house. If you're self-employed, however, you'll need 45% down just to buy a $250,000 home.
If you're hoping to purchase a home, talk to your local lender to see what their criteria are for their various grades of loans. Even if you've had a bankruptcy in your past, that doesn't mean you can't buy a home. It just means it may take some time, you'll need to establish a strong employment history, and you'll need to save more money for a down payment than if the bankruptcy hadn't occurred.
(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.
Forget what you've been told about credit. Get the Credit You Need to Buy Real Estate. Visit Real Estate Credit Help Center: http://www.recredithelp.com
So you've decided you want to own a home and... Read More
Do you need to download a Landlord Inventory on-line now?... Read More
BuyersLooking for a home-Use Internet for overview of properties, communities,... Read More
Take me Back to the Black HillsLocated in Western South... Read More
Every one should have a home inspection before purchasing any... Read More
These real questions on new home starts and interest rates... Read More
Finding a rent-to-own house is one of the many ways... Read More
Many would-be real estate investing professionals face discouragement because of... Read More
Most people buy one or two properties. One is their... Read More
Is your pet worth $100,000? It may be if you... Read More
"Begin With The End In Mind"I first heard the phrase... Read More
We all are thinking about it and some of us... Read More
The biggest secret of conducting a successful lease purchase business... Read More
Keeping your existing house when you buy a new one... Read More
Building a house (or lots of them) seems to be... Read More
When I first started getting active in creative real estate,... Read More
Renting to tenants is no longer "where the money is"... Read More
A stagnant stock market, low interest rates and booming property... Read More
The housing market has exploded in the last five years,... Read More
The last downturn of the global stock market saw millions... Read More
Searching for just the right home can be very exciting.... Read More
According to the Federal Housing Finance Board:... "As of October... Read More
Knowing what a Good Deal is ? Is the Key... Read More
What is a loft apartment? At the most basic level... Read More
Our complex IRS code requires that your, as a real... Read More
There are three investment vehicles which can make you rich.... Read More
Earlier this month, Realtor Magazine announced that they would be... Read More
Buying a house can be a daunting task, even for... Read More
Property Condition - Seller's What to Expect During the Inspection... Read More
To make the maximum profit on your investment properties, you'll... Read More
For those looking to invest in the real estate market?keep... Read More
Well, as we have discussed in previous newsletters first you... Read More
Lease Purchasing affords the tenant/buyer a wonderful opportunity to get... Read More
Selling your home? Here are some suggestions to help you... Read More
Years ago, the only person that could buy a home... Read More
Everyone has heard a story or read about someone who... Read More
Avoid 12 Common Mistakes Made by Novice Investors and Ensure... Read More
Purchasing a home can be a complicated and confusing process,... Read More
Are you seeking your little corner of sun drenched heaven... Read More
Spain and Portugal have suffered one of their worst droughts... Read More
Should you sell your home yourself? Yes and no. Yes,... Read More
There is a relatively new and not always well understood... Read More
As the second largest city geographically in Florida, this beautiful... Read More
A stagnant stock market, low interest rates and booming property... Read More
In many places you can buy a house and a... Read More
New Marketing and Design Psychology ideas help you stage homes... Read More
There has been speculation in the media recently about the... Read More
In our fast paced and frantic real estate market, buying... Read More
Do you dream of becoming a multi-millionaire real estate investor?... Read More
The San Antonio, Texas real estate market is still going... Read More
Questions Sellers Should Ask in Agent Interviews:1. Is your license... Read More
If everyone always did everything they said they'd do, we'd... Read More
In the wake of Hurricane Katrina's wide path of destruction,... Read More
It's a dream for many to buy and take ownership... Read More
To make the maximum profit on your investment properties, you'll... Read More
Being a real estate investor is not really that hard,... Read More
Most people who complete a self build will go on... Read More
To make a good profit in real estate, you must... Read More
Great, now how do I actually INVEST in real estate?Investing... Read More
Closing costs are often the last thing a person thinks... Read More
Are you using the equity from your home to purchase... Read More
Every Realtor KNOWS that a home should be shown in... Read More
Real estate web design requires you to do things a... Read More
From the desk of Colm Dillon ... Author "Residential Development... Read More
If you are considering getting involved in investment real estate,... Read More
You may have heard all the buzz about the newest... Read More
Real Estate |