The Finance Blogger

Having a bad credit rating is bad enough, however when you also need a home personal loan, it can get quite frustrating. Whatever your reason for needing money, many people finally realize that they should have paid more attention to their credit rating when they are turned down for a loan or they have to pay a higher interest rate than they expected.  Once you have a bad credit rating, it is very difficult to find anyone to lend money to you at reasonable rates and terms. When you do find a bank or company that will provide Home Loans for People with Bad Credit, they want a high interest rate and they want expensive terms usually in the form of high fee’s. They tend to take this position so that they can protect themselves financially from customers who are unable to repay their loans.

Home Loans for People with Bad Credit  – Interest Rates?

Bad credit home loans will usually be a percent or two higher than the regular loan interest rates. Even then, depending on your circumstances for how you  ended up with a bad credit rating, you may still not be able to find a lender. With all of the losses these days in the housing industry, the record of people walking away from homes etc, there are just not that many lenders that are willing to lend money to people with bad credit ratings. Bounced checks and checks that are refused due to insufficient funds are a big warning for any lender who is reviewing a loan application. Next are the pay-day loan lenders and other unscrupulous lenders that charge extremely high amounts of interest which are even higher than those charged by credit card companies.

Bad Credit Rating Reasons

If your bad credit rating is due to a missed payment or two, you may not be in that bad of shape. On the other hand if you walked away from a mortgage home loan and just stopped paying your monthly payments because the value of the home is a lot less than the value of the mortgage, your credit rating will reflect this and it may be a long time before you can find someone who will lend you money. They will want as a minimum, that you have at least 25 % equity in the home if not more before they will make a home loan. Who has a 25% down payment these days?

Lenders will request copies of your last bank statement. They are looking for records of income deposits and for checks written and denied with insufficient funds. This is a clear warning to them that there may be a larger problem. Make sure that your statement is pristine for several months before you apply for a loan. No checks bounced with insufficient funds, no late payment charges etc should appear. These are dead give aways to someone who has financial problems.

If you have questions about bad credit home loans or other subjects, please feel free to leave a comment and we will try to answer them in a subsequent post!

For post about bad credit home loans and how to manage bad credit, click here.

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