More Home Loan Options Now Available For Borrowers With Bad Credit

For a long time after the real estate housing crisis in 2008, buyers with a poor credit history had a difficult time finding mortgage financing. It was a problem that trapped those seeking to buy a home because so many lost their homes from the inability to pay their mortgages.

Some suffered damage to their credit history that was severe. Millions filed for bankruptcy.

Not only did mortgage lending requirements get stricter for home buyers, but the funds available for home loans were also severely reduced. Even those with a good credit history found it more difficult to qualify for mortgage financing.

Time For A Second Chance

Now, there is a much better environment for homebuyers with a bad credit history who are seeking a loan. Those with a bankruptcy on their record, which was settled at least ten years ago, will see the bankruptcy taken off their credit history. Suddenly, their credit score may increase dramatically.

Unconventional Financing

Conventional financing is available for those with decent credit. This includes attractive terms and conditions for FHA loans and other federally-based loan programs. Those with bad credit may not qualify for these loans. If they want to buy a home, their only option is to use unconventional financing, also called non-qualified mortgages (non-QM).

Unconventional financing has higher costs and no federal insurance. In 2008, these non-QM loans were a total of $65 billion per year. In 2009, this figure dropped to $10 billion and, in 2010, the low of $8 billion.

Since 2010, the availability of these non-QM loans steadily increased. By 2018, the total amount of these loans was up to $45 billion. That figure will be higher in 2019.

Is There Another Real Estate Bubble Happening?

Are we back to where we were before when the real estate market collapsed in 2008? As far as the total amount of non-QM loans, we are close. However, the qualifying standards for these loans are stricter than a decade ago.

There is less predatory lending where borrowers who do not truly qualify get a no-doc loan without proving income. Before those predatory loans often had a teaser introductory rate that quickly escalated to an amount that made it impossible for the home buyer to continue to make their mortgage payments. There are fewer of these loans now.

Summary

Besides the big picture real-estate-bubble worries, the positive news is that borrowers with a poor credit history can now participate in the housing market again.

Be prudent when considering a mortgage and carefully think about the ability to make the monthly payments. Read all the details of the loan requirements carefully. Use competent professional advice from a trusted home mortgage professional to make sure there is a very clear understanding of the loan terms and conditions.

When you have your financing secure, be sure to consult with your trusted real estate professional to help you find your new home.

Source: http://mgrealestateblog.com/mortgage/more-home-loan-options-now-available-for-borrowers-with-bad-credit/

About the Author

What sets you apart from the competition?

“I love real estate! It is both my profession and hobby, and I am constantly studying my market space and new strategies to keep ahead. I offer my clients personalized service based on integrity backed up by a track record of success. I bring a great balance of creative and analytical skill sets while applying an intuitive and assertive approach, as each opportunity is unique.”

How did you become so good at what you do?

“Since I was a child growing up in El Segundo, I was naturally drawn to the changing built environment. I was fascinated by new construction and how over the years certain areas transitioned more quickly than others. Once I decided real estate was my calling, I already had a jump-start on the Westside and South Bay markets. By furthering my education with a boots-on-theground approach, I have become an expert in my field.”

How did you become so good at what you do?

“Since I was a child growing up in El Segundo, I was naturally drawn to the changing built environment. I was fascinated by new construction and how over the years certain areas transitioned more quickly than others. Once I decided real estate was my calling, I already had a jump-start on the Westside and South Bay markets. By furthering my education with a boots-on-theground approach, I have become an expert in my field.”

Real estate is highly competitive; how do you maintain a code of ethics?

“Disclosure is non-negotiable. Transparency is vital. In this highly competitive, saturated market the temptation to make a deal may give way to compromises by some agents. I am keen on building relationships that support future recommendations and referrals. I am only as credible as my last deal, so my ethical standing is all I have at the end of each day.”

What has been the highlight of your career so far?

“The relationships I have built with so many great people over these past 12 years. Great relationships have forged the trust needed to grow into additional business and investment opportunities. These in turn have resulted in a growing network of valued clients.”

How do you manage volatility in the market?

“Are you buying a home to live in or investing in residential or commercial property? Each class of real estate offers different methods to reach your goal. I provide added value to my clients by helping them define their goals, protect their interests and meeting— if not exceeding—their expectations. Each transaction requires being well-versed in the particulars that drive the deal.”