Home Loans For People With Bad Credit Scores

Just about everyone has had a bad credit score at one point or another in their lifetime and that can make things quite difficult if you are looking to purchase a new home or refinance your home mortgage loan. The recent calamity in the home mortgage industry and the incredibly large number of mortgage foreclosures in recent months has led to tougher and tougher requirements when it comes to home loan approvals and this has led to a lot of would-be-home owners been left in the lurch. That being said, there is a solution which is home loans for people with bad credit scores.

A bad credit home loan is essentially what its name suggests; it is a mortgage for people with a low credit score. The reason that a lender is willing to issue home loans for people with bad credit scores is primarily that the interest rate is usually higher if you have bad credit and so while there is a greater risk to the lender, the reward is also greater. The mortgage lender also takes additional steps to assure that the loan is secure by often requiring a higher down payment and more documentation of income and proof of ones ability to pay back the loan.

There are basically two types of bad credit home loans, secured and unsecured. A secured home loan is one in which you have assets which you use as collateral against the home loan, such as home equity or second home, etc. And as you may have guessed an unsecured mortgage is a mortgage where you do not have assets to use as collateral. While both types are common, and unsecured loan is much more common when you are looking for home loans for people with bad credit scores.