Shari Saba

Loan Originator

  • Home
  • Blog
  • Main Website

More Home Loan Options Now Available For Borrowers With Bad Credit

October 3, 2019 by Shari Saba

More Home Loan Options Now Available For Borrowers With Bad CreditFor 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.

Spread the Love!

Mortgage Tagged: Credit Score, Financing Options, Mortgage

Shari Saba

SHARI SABA


Loan Originator
615.202.1720 - c
615.537.3969 - f
ssaba@lincloan.com
NMLS # 167053 • TN Lic# 167063
Interlinc Logo

Article Categories

Archives

Looking for something?

March 2021
M T W T F S S
1234567
891011121314
15161718192021
22232425262728
293031  
« Feb    
InterLinc Mortgage Services, LLC. NMLS ID: 205696. Tennessee Mortgage License ID #114460. InterLinc is an Equal Housing Lender.
DISCLAIMER: This is not a commitment to lend. Credit and collateral are subject to approval. Other restrictions may apply. Programs, rates, terms and conditions are subject to change without notice.
Branch NMLS# 1965514
https://www.nmlsconsumeraccess.org
Equal Housing Lender

Location


5314 Maryland Way
Suite 201
Brentwood, TN 37027

Copyright © 2021 Shari Saba  ·  All rights reserved   ·   Log In