Be Eligible For A Home Loan In Spite Of Your Bad Credit

Be Eligible For A Home Loan In Spite Of Your Bad Credit

by Mary Wise

Your credit report is not everything, when it comes to applying for a loan. Maybe a small one will not require much checking out, but if what you are applying for is a home loan, things can change pretty much. You will not be able to change your history. What is essential is to be prepared and to have a positive attitude.

When They Catch You Off-Guard

Questions like how much money you spend monthly, your employment history and what bank accounts you have and in what condition, often make you feel a little invaded. What the lender wants to know is if it is safe for him to lend you money or not.

So it is good to be prepared for this type of question so as not to give the impression that you are hiding things. Usually, knowing about bad credit is not enough for the lender. He wants to know how you got into it and how you plan to correct it, namely, if you have a firm, positive attitude towards your financial progress.

Credit Report, An Important Complement

Now comes the information on your credit history, which your would-be lender will not take directly from you. Instead, he asks the credit bureau to which he is subscribed to send in your credit report. This is essential information which some creditors use as only evaluation of your eligibility for a loan.

What Bad Credit Does

With the aid of the loan officer, you will arrive at a convenient amount to ask for and a payable monthly instalment, based on your records. Neither of you want a problematic instance. So, you will qualify anyway, but for a smaller amount or a longer period, meaning bad credit won't keep you away from a loan.

The Loan Officer

The loan officer wants to gain a client, so he will try to keep you happy with a loan, as well as keeping his money safe. He will surely ask what you will do with the cash, not because you have to give a reason, but to assess you better. He might even want to suggest some type of investment for the near future and assess you accordingly as well.

The Easiest Possible Loan

The easiest loan to obtain is a home loan, in which your property is the security of the borrowed money. There is a low risk for the lender, since he is entitled by law to keep your home if you do not pay back the loan. Therefore, the risk falls on you. Now, you know exactly what to do when the monthly payments are due.

You will remember the bad credit history and say "never again". It's just not wise. The modern trends of mainstream society drag you towards spending in advance. What is credit for, anyway? And you end up lost in debt.

Good Conditions

You can't do anything about your credit history. That is the past. What you CAN do is to have a good attitude, improve your spending habits and not necessarily living on bread and onions. Just cutting out the surplus expenses will do.

For example, reading the newspaper costs you money everyday. The headlines on internet are free and it will only take you a few minutes to sift through the article of greatest interest to you. The rest is useless to your financial wellbeing.

The Housing Bubble and It's Effect On Your Equity

The Housing Bubble and It's Effect On Your Equity

by Trisha Dingillo

Buyers have been waiting patiently for the housing bubble to burst. Others hoped it was untrue. But what we've been witnessing is more of a fizzle.

If you have been keeping current with the real estate market, you have been watching the housing bubble which predicted that soaring increases in property values would end abruptly and fall into massive decline.

There were various opinions on the reality of the bubble at all. Most real estate professionals denied its existence, while economic experts had a more realistic outlook of what would happen to the real estate market.

The Real Estate market has been on a steady decline in parts of the country. Recent CNN studies showed a year end decline of up to 17% in some cities, while other cities showed a 23% increase in property value.

Although depreciation may be good for prospective home buyers, what will happen to sellers or people who need to use their equity to fix unfavorable financial situations?

The equity in a home has always been a safe haven or backup plan if a family fell on hard times. Refinancing for cash or a home equity loan in an emergency is very available and an easy to way to get cash in an emergency or to pay off major debt.

It is suspected that a market adjustment, or correction, may be necessary. If this happens the outcome may easily affect home owners who may see their equity vanish before their very eyes. In efforts to spur the economy, if the future shows us no factors, such as a decrease in interest rates or an increase in population (buyers), a market adjustment must be made. This will in effect decrease home values even further, possibly by 10% or more. Another hit to your equity.

If you have not owned your home long enough, or did not put and money down to purchase your home, you may end up owing more than your home is worth as your home value plummets and your equity completely disappears. Refinance or home equity loans will not be an option as there is no money left to take out of your home.

It may be wise to ask your local real estate agent to do a Comparative Market Analysis to estimate your homes value. Subtract 10+% off that value to see where you stand. If you are in the safe zone if an adjustment is actually made, cash from your home may be possible.

This looks bleak for those who need financial help out of debt or crisis and are in the position to lose their equity, even more so if their credit is damaged. If you pull your equity out now to get out of debt, your home could be over mortgaged in the future.

This still may be an option for many. If you make this choice, make sure the cash from your home will solve the problem permanently and put you in a financially stable position for at least 3-5 years. Also make sure that you want to stay in this home as long as possible. You can only sell an over mortgaged home for a loss.

If this option does not suit you, you may also consider seeking Debt Consolidation Counseling from a reputable firm. Some firms are good and honest you just need to know what to look for.

I have two last resort options that may be hard to swallow, but desperate times call for desperate measures. If your home is set up for it, rent a portion of your home for extra cash to get you through tough times. And lastly, if your debt is consuming your life and your mortgage is one of the main reasons that you are having trouble, it may be time to sell while you still can, and find something more comfortable financially. Make sure to know your homes value and price it correctly. Also make sure to have time and money to hold out in a slow market.