Mortgage loans help the individuals to satisfy their immediate demands. Mortgage is the security for the loan amount that is provided to the money lender for getting the loan. Most mortgage companies do not risk the mortgage amount by providing loans to the people with bad credit scores. There are some bad credit mortgage companies that provide mortgage loans to bad credit holders but the interest rates charged are often higher. Getting the mortgage loan from such companies and repaying the mortgage amount on time along with the interest rates, you can raise your credit score.
Federal Housing Administration (FHA):
The Federal Housing Administration is the government agency from United States that provides insurance on the mortgage loans approved by the FHA mortgage lenders in United States. It provides insurance on the home for single family and multifamily that include homes and hospitals. It is the biggest company in the world providing insurance on the mortgage loans. The main objective of FHA is to stabilize the mortgage market, improve the housing standards and providing adequate home financing system by insuring mortgage loans.
The loans provided by FHA are quite flexible and you can get them even if you have bad credit history. For getting the mortgage loan from FHA, it is important that your credit score should be 3 percent down. But if you have poor credit, it is good choice to put it down to lessen the risk for the mortgage lender. Credit is only the part of your application but the down payment and the job history are quite essential.
Getting FHA Loan after Having Bad Credit:
Bad credit history can affect your chances of getting mortgage loan from the loan providers. However, it is possible to get the loan from the lenders despite of having bad credit history by paying more down payment amount. FHA loans look at the job history of the applicant and do not consider the credit history of the applicant.
You can also get the FHA loan if you have undergone bankruptcy, late payments, foreclosure, or liens. When you have filed a bankruptcy, you will have to wait for two years after your discharge date for applying to the FHA loans. By holding good payment history after filing bankruptcy, you can easily qualify for the FHA loan.
In case you have foreclosed your home loan, you will have to wait for 2-3 years after the foreclosure date to apply for FHA loan. Lender may ask you the letter for foreclosing your home loan.
By showing the overall positive credit history, you can be approved FHA loans if you had made no late payments in the past.
For getting the FHA loan, it is important to show the credit improvement to the lender. If you have any Federal lien, that is security interest over the property to secure your loan, you may not qualify for the FHA loan.
The bad credit mortgage companies are helping the individuals with bad credit scores to get the mortgage loans and improve their credit score. By showing continuous improvement in the credit, you can get easily qualified for the FHA loans.