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         Overcoming Credit Problems           

It happens to many people, Obligations, Debts, Monthly bills. They all can combine to get the best of you and as a result, a credit problem arises. In the not too distant past, this often meant having to wait 5 years, 10 years or more before attempting to purchase a home, especially if there was a Bankruptcy or a Foreclosure. Now, however, there are sources that can help those who are overcoming credit problems and  improving your bad credit and re-establish a solid credit rating so you don't have to get a bad credit home loan.

Overcoming a Credit Problem

Determine precisely what is causing the delinquent credit problem. You will need to have a clear picture of your current credit status so that you know what to concentrate on. The quickest and easiest way to accomplish this is to get a copy of your Credit Report. You may be able to due this through your lender or directly with the credit rating agencies.

If you need credit repair, begin the process at once. There are Credit Repair counselors who will, for a fee that is usually in the range of several hundred dollars, help you with the process.  Check out the video above for information on a solid credit restoration company.  Or, with the right information at your disposal, you can handle the process yourself. A good consumer option that may be able to help you is called Score Assist. A similar option is to also check direct with one of the credit reporting agencies such as Equifax You should get your reports from all three credit reporting agencies, Experian, Trans Union, and Equifax

  Start by getting the credit problem under control now. Do not incur any new debt. Do your best to begin to live within your means. This will be an advantage now, when you are applying for a loan, as well as later, when you will need to meet your monthly mortgage obligation.

  Avoid Credit Counseling programs that want you to enter into a payment plan with them.   Most of these companies are supported by the lenders and are no better off than filing a Chapter 13 Bankruptcy.  This is different than doing Credit Repair or dealing with a Credit Restoration Counselors.   If you have to go into credit counseling you will need to show that you have met your obligation for at least 12 months before you can apply for a FHA loan.  If you are in credit counseling then you need to have made your payments on time for at least 12 months.

Make a commitment to a program of savings. Even if you have had a credit problem, there are options available for mortgages for people with bad credit if you have some down payment money available. Most lenders have loan programs that vary from a few thousand dollars to 5% down payments.  There is little or no hope if you have both credit problems and no cash.

Concentrate on your needs in housing before your wants. Re-establishing your financial footing is not as difficult as it used to be, but it is impossible if you attempt to buy more house than makes sense. Be conservative!

Concentrate on those lenders who specialize in working with those who have had credit problems and will make a bad credit home loan.  Spending time (and money) applying to lenders who do not work with credit blemishes will accomplish nothing. If you have a local source that you know will consider such loans, take advantage of them.

  If you have credit problems, you may have better luck working with a National Mortgage Banker verses a local Bank.  The National Mortgage Banker may have more options available than your local Bank as they typically have more sources and programs that will make a bad credit home loan.  Try to get a recommendation  from someone you trust rather than just randomly picking someone. 

  Another option is to look for a home where the seller will carry a second mortgage for you.  If you have 5% for you down payment, then lender will only lend you a mortgage for 80% of the home value, the seller can carry a second mortgage for 15% of the purchase price.  Be sure to discuss this option with you Lender and Realtor.  There are fewer home available were the seller will be willing to do this.

  Generally most past credit problems can be fixed in a relatively short period of time. Since your lender is motivated to help you purchase a home, ask them exactly what you need to do to overcome any credit deficiencies so you don't have to get a bad credit home loan. The time and effort you spend to fix these items will pay big dividends in the form of lower interest rates or less money needed to purchase your home.


 

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