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Guaranteed Installment Loans For Bad Credit Home Mortgage Financing Alternatives For Those With Less Than Perfect Credit

installment loans guaranteed approval

In order to obtain a home mortgage through conventional lending institutions, borrowers must have a fico score of 750 or higher. Additionally, borrowers must exhibit a strong history of paying loans on time and a solid work history. Fortunately, financing alternatives are available for individuals with less-than-perfect credit.

One home mortgage option is known as seller carry back financing. Using this strategy, sellers act as the lender and personally finance all or a portion of the purchase price. Seller carry back mortgages typically extend for two to five years; giving borrowers time to clear negative credit. Once the contract expires, borrowers refinance the loan through a traditional lender.

Another home mortgage finance option is rent-to-own real estate. Buyers reside in the home and pay the property owner rent. A portion of rent money is contributed toward purchasing the house. Most sellers of lease to own properties require a 10- to 20-percent down payment. Contracts last between two and three years and help buyers establish a solid payment history.

Buyers engaging in seller carry back or lease to own transactions should have contracts reviewed by a real estate lawyer. Home mortgage contracts should include default clauses to protect both seller and buyer.

Buyers should make monthly payments via bank check. This will help expedite verification of payments when borrowers are ready to obtain home mortgage financing through a traditional lender. Paying with cash or money orders is strongly discouraged unless the seller provides notarized receipts.

A third option for obtaining home mortgage financing is through private real estate investors or investment groups. This type of lending practice is referenced as hard money loans.

While hard money financing can help bad credit borrowers purchase a home, these installment loans for very poor credit are not cheap. Interest rates typically range between 15- and 20-percent. Down payment requirements range between 25- and 50-percent.

Hard money loans are intended for short term financing. Terms usually extend between one and three years. Individuals who obtain private lender mortgage installment loans guaranteed approval should strive to refinance through a conventional lender as quickly as possible. Most banks will approve home mortgage loans once borrowers establish a consistent payment record of 12 to 14 months.

The Department of Housing and Urban Development provides several home buyer assistance programs. HUD loans are available to low-income buyers and people employed in certain fields such as teachers, fire fighters and police officers.

The Federal Housing Administration provides loans to borrowers who meet eligibility requirements. FHA loan applicants must provide proof of income, real estate property appraisal, and source of down payment; e.g.; monetary gift from family, inheritance, or savings account. Lending limits vary by state and borrowers must work with an FHA-approved mortgage broker.

Individuals who cannot obtain home loan financing should strive to clear negative history and work on improving their FICO score. Individuals should obtain a copy of credit reports from Trans Union, Equifax and Experian.

The fastest way to improve credit scores is to reduce credit card debt. Strive to reduce balances to 20-percent of the credit limit. For example, if the limit is $5000 the outstanding balance should not exceed $1000.

Another important factor of improving credit scores is to pay all bills on time each month. Credit scores can increase 100 to 300 points by reducing outstanding debt and consistently paying bills on time.

Higher fico scores equal lower home mortgage loan interest rates, which equals reduced monthly payments. Your credit rating is one of your most valuable assets. Take every step possible to protect it.

California real estate investor and published author, Simon Volkov provides an extensive home mortgage article library via his website. Topics include: home ownership, personal money management, estate planning, real estate investing, alternative home guaranteed personal loan for bad credit financing, and more. Stop by to learn more.