subject: Poor Credit Home Loans – Ditch the Hype and Change the Way Lenders Look at You Forever [print this page] Poor Credit Home Loans Ditch the Hype and Change the Way Lenders Look at You Forever
Poor credit home loans are in high demand especially given the current economic circumstances. In fact there's almost too much information available about them.
I'm sure you've found yourself in a similar situation, needing money for car, home improvement or something else but you've got bad credit and are worried lenders won't give you any money.
And after you've done your homework you find that everyone wants to give you money, despite your bad credit. It doesn't matter what it's for, cars, houses it doesn't matter, all you know is the money is readily available.
Sounds great right?
Now ask yourself this. "Why do lenders want to extend credit to me, even with my bad credit history?"
The question can be answered quite easily high interest rates. You'll get approved but it'll cost you literally
You might think "So what, it's just a few percentage points more." But these "extra percentage points" add up over the long run. Let's look at an example.
Let's say you go to buy a $20,000 car but because of poor credit you pay 20% in interest. That 20% interest payment translates to a $529.00 per month car payment.
Now let's look at that same $20,000 loan but with a better interest rate. Assuming you have good credit you would most likely qualify for a 10% interest rate, cutting your monthly payment to $424.94.
That's an additional $6,296 you end up paying over the life of the loan.
But if you think that's bad, let's try applying that same scenario to a mortgage payment.
Let's say you find a lender that approves you for a $100,000 mortgage but charges you 12% interest because you have bad credit. Your monthly payment works out to $1,028.61.
However, if your credit was good, that same $100,000 loan would be charged at a 6% rate giving you a $599.55 monthly payment.
Over the course of the 30 year loan at 12 % you will end up paying $154,461.60 more than you would have had you been approved at 6%. That's over 1 times the cost of your house!
So why do lenders charge such high rates? Because they can. They know that because of your bad credit lenders are reluctant to loan money at low interest rates so they know you're pretty much stuck.
So now do you understand why there are so many bad credit lenders? They know you need credit and they'll give it to you, but at a premium.
So you might be asking yourself "What are my options then? My credit is shot and I have no hope of qualifying for a lower interest rate?"
Have you ever considered that maybe you're looking at this the wrong way? Let me explain. Rather than settle for a high interest rate poor credit home loan, you might want to consider repairing your credit so you can qualify for a lower interest rate.
If you can put things on hold for a while and make some changes to your credit score you should see in increase fairly quickly and then you can start looking to take out a loan.
I know that this isn't what you want to hear, but don't you think it's worth a few months of work to save thousands or even hundreds of thousands of dollars in the long run?
Don't think that just because you have bad credit you need to settle. Often it's possible to make changes to your credit score and see results in as little as 30 days.
Repairing your credit is not as intimidating as it might seem. Basically you have 2 options. You can go through a professional credit repair firm or you can do it yourself.
If you decide to hire a credit repair agency know that it won't be cheap. They usually charge anywhere from $2,500 $5,000 or more, but you'll still save more in the long run this way.
In spite of the credit repair agencies high fees you should understand that there's nothing a credit repair agency can do for you that you can't do yourself. There are a few steps involved in the process, but once you understand how it's done, it's really not that difficult.
You should strongly consider putting off your search for a bad credit mortgage or loan until you've made some improvements to your credit score. Take a few months to improve your credit so you can get approved for a lower interest rate and a great loan.
