Owning a home is always part of everyone’s dreams. Why not? A home is one’s abode and sanctuary. It is difficult to own a home, however, when one has a low credit score. One cannot easily get access to traditional mortgage loans especially those who once had their house foreclosed during the real estate bust many years ago. Traditional financing companies usually shun those with low credit scores, often declaring that if they will not grant a loan to one person with bad credit history, no one else will likely do so, as well.
Is there no hope for those with low credit rating to get own a home?
Fortunately, contrary to what other financing companies declare, there are home loans available for those with bad credit. Those financing companies are called sub-prime lenders. Sub-prime loans usually have higher interest rates and higher cash down payments. It also takes quite a bit of time to process the loan application, longer than the traditional credit approval process. But, the good news is that they usually get approved.
Though the higher interest rates, higher down payments, and longer processing period can be a downer, at least it still provides a bit of hope for those with bad credit to get home loans. Even if one had once filed for a bankruptcy or have had his or her house foreclosed, there is still a chance for one to buy a home. It just takes time and patience.
Traditional lenders and financing companies do not provide sub-prime loans. It is imperative, then, for people with low credit scores to know what differs between mortgage lenders and mortgage brokers. Getting a mortgage broker ups the chances for one to find a financing company that will provide sub-prime loans.
Mortgage lenders or financing companies provide the loans. They lend the money to borrowers. Mortgage brokers do not provide the loans. They are those who match the loan applications from the borrowers to the appropriate lenders, or the lenders who are most likely to provide the loan based on the application details and credit status of the borrower.
Sub-prime mortgage brokers match sub-prime loan applications, or the loan applications of those with low credit scores with sub-prime lenders or financing companies which are most likely to provide the home loans to those with bad credit.
People who are looking to apply for home loans can find a few sub-prime mortgage brokers by searching of them in the internet. Those sub-prime mortgage brokers will provide a list of at least four sub-prime lenders and arrange for the loan applications or for those sub-prime lenders to propose the terms of what they can offer to those potential borrowers. Providing at least four options will allows one to compare and find the best available credit terms that will most likely fit his or her needs.
Most of the sub-prime mortgage brokers also provide credit repair services. Those services will help lower the interest rates of the loans provided to those with bad credit. Even a 10-point credit score improvement can help cut interest rates by a half or full percentage point, which can spell a saving of hundreds or even thousands of dollars in interest payments. This can mean a lot to someone who every dollar he or she can get to pay off other obligations to improve his or her credit score.