It's a fact that the economy, especially when it comes to the housing market, has been taking a series of body blows since at least October of 2008. People have been put into tightened financial straits, and they may have had to put off paying a few bills on time, though they still get paid in the end. If this sort of circumstance has occurred, but a home is still desired, then this could be the time when a poor credit home loan is a possibility.
To begin with, the term "poor credit home loan", can go by different names. In the mortgage and real estate business these are called "subprime loans", for the most part. This term, especially, has been the subject of much debate since about October of 2008, when the housing market began to fall apart, somewhat due to the effect of too many of these loans being held in too many lenders' portfolios.
Poor credit home loans aren't bad in and of themselves, for the most part. And they can be a sound way to get people that have had credit issues in the past into homes that might otherwise never be sold. Ready and willing buyers with a few slow payment problems and the like are different, by the way, from those buyers who never paid anything on time and just walked away from a home lone when times got tough. They'll have a lot of difficulty getting a home today.
Those other buyers, though (those who have had only a few issues in the past) can still get, even in these toughened economic times, home loans, and that's as it should be. The interest rates will be somewhat higher (anywhere from 1 to 4 or more points) than the prime rate offered to people with scores better than poor, but that's to be expected.
Prime rates, for a fact, are generally reserved for buyers these days with credit scores (called FICOs) ranging from 700 to 800 or better. Almost nobody below 700 will score a prime loan in the current lending environment. And bear this in mind: any delinquencies on the credit report the mortgage lender or broker will pull will have to be cleared up before any lending decision is made.
Cleaning up the credit report should be a priority, anyway, even if there's going to be a poor credit home loan in the offing. Oftentimes, it can lead to a savings of at least one percentage point off the interest rate, which can lead to the saving of thousands of dollars over the life of a mortgage loan. |
