One of the casualties of the housing downturn is many homeowners are either upside down on their home loan or have had their income reduced so much that they can no longer afford the monthly payments on their existing mortgage. For people seeking a new home purchase, this can be difficult due to a bad credit history. The good news is that not all bad credit customers are completely shut out of the housing market. They too can become homeowners.
It may take a little extra work or it may require going through the loan process through less conventional means, but it is indeed possible to obtain new home loans for bad credit in Tucson. Outlined here are just a few examples of how a potential bad credit applicant can turn into a new homeowner.
Advantages to Those with Bad Credit
One of the best advantages a potential borrower with bad credit can have is money for a down payment on a new home. For a borrower to get home loans for bad credit in Tucson, this can be the single most important thing to at least get their foot in the door. Most lenders ask at least 10% down on the home. Of course, more is better. Having 20 to 35% down on a home can significantly increase the chances of an applicant to be approved for a new home loan.
FHA Loans May Hold the Answer
Another option that a borrower may consider when faced with bad credit is applying for a FHA loan. This is basically a federally insured loan that goes through The Department of Housing and Urban Development or HUD. If a borrower qualifies for this type of loan, they typically do not have to have quite as much money to put down as they normally might have to have through other means.
If the previous mention avenues to go down do not work, then another option might be to have a cosigner on the loan. This would of course require a person with good credit and financial backing to vouch for the person making the loan. The pitfall of having a cosigner is that if the borrower defaults on the loan the cosigner may be forced to be responsible for the remaining debt. In some circumstances, this can be a great way to get a loan with a person is fully qualified in every other aspect except for their credit score.
If, in the end, a person cannot be approved then it is still not the end of the world. There is still plenty of time to work on a person’s credit score. By fixing the bad marks on the credit score, the total score will go up over time and thus may get the person qualified much quicker.
Rob Sanchez is a senior loan officer for Nova Home Loans, a full-service mortgage bank that has helped customers finance their loans for more than 30 years. Financial services include mortgage home loans, first time buyer loans, refinance loans, home loans for bad credit in Tucson, and more. Service areas include Tucson and Green Valley, Arizona.
