Subprime mortgage lending was one of the major factors in the financial crisis that has caused so many economies such problems in recent years. These mortgages were rolled into packages, Collateralized Debt Obligations (CDO) with A rated credit. Taking the status of the A rating items, they fuelled the real estate market and hide a time bomb in the process.
Everyone was lulled into a false sense of security as real estate prices rose; that came to a grinding halt but life goes on and people starting out in life, or those moving for employment reasons are just two sections of people who still want mortgages. Unfortunately for those who suffered financial problems in the crisis they now come in the form of bad credit loans.
There are still ways to get mortgages even if you are in the bad credit loans category but they will come at a price until you can repair your credit score.
There are Federal options; agencies under the umbrella of the Housing and Urban Development (HUD) Department may be able to help and can even facilitate smaller deposit requirements. The Federal Housing Administration can certainly help and it is particularly useful for people whose only option is bad credit loans. Their advice is free and there are counselling agencies throughout the USA.
In terms of a first time buyer the problem may be as much the size of the deposit available as finding a lender willing to deal with someone with a bad credit score. Subprime rates (effectively bad credit loans) will be 1-2% higher than normal mortgages; this is the reason why the mortgages are available, higher profit for the lender.
There is a program exclusively for Military Veterans that will help for personal loans for people with bad credit status incidentally.
There are first time buyer’s programs for mortgages up to a certain level; it restricts some location options purely on price but it’s a start. Even with a low credit score the facilities are available. The chances of approval are certainly increased by being able to pay a sizeable deposit; it shows the buyer’s commitment. It is not always easy to provide that if the applicant is in the bad credit loans category; they are there after all because of financial failure.
It is really a matter of making a convincing case to offset a credit score. A regular job is certainly a good start. If you have assets such as retirement and insurance sums that may well improve your case. If you can show you have started to live within a budget that certainly may help convince lenders that you now understand the realities of finance.
It is certainly a matter of being realistic about the amount of mortgage you apply for; bad credit loans are more expensive so anything you can do to improve your credit score certainly helps and showing the possible lenders the action you are taking to improve your situation certainly assists in your getting a positive result.