Bad Credit Mortgage Loans - Easier To Get Approved With A Bankruptcy

May 13, 2005 — A few years ago, if you had a recent bankruptcy or foreclosure, finding someone to approve you for a home loan was almost impossible. Nowadays, not only can you find someone to finance you, but you should be able to get approved at a decent interest rate as well.

In order to qualify for a home loan after a recent bankruptcy or foreclosure, you should have a credit score of 580-600 or higher. With a credit score of at least 600, depending on your situation, you could be able to get 100% financing and an interest rate of 6.5-7% depending on your income verification. If you have even 5% to use as a down payment, you may be able to get a an approval with a lower credit score than a 580.

The key to getting approved, even with recent major credit problems, is to make your current payments on time and be able to have good income verification.

There are major lenders now, who specialize in financing people with recent credit problems and difficult situations. One of the techniques lenders use today, to make these types of loans work with 100% financing, is to do what is called an 80/20 combo loan. That is where you purchase the home with a first mortgage, which is 80% of the loan, and a second mortgage which is 20% of the loan. The 80% loan will usually be a lower interest rate and the second mortgage will usually be higher. It could be as high as 10-12%.

Of course, with bad credit, getting approved for a refinance loan is going to be much easier than getting approved for a new home loan. If you can get approved for a new home loan, sometimes it is good to refinance within 6 months to a year after your purchase and lock in a lower overall rate and payment.

With bankruptcies and foreclosures on the rise, lenders are modifying their programs to continue to cater to the needs of the borrowers.

To see our list of recommended lenders who specialize in bad credit mortgage loans, visit us at http://www.my-mortgage-loans.co.uk