Although buying a house on bad credit is possible, the annual interest rate charged by the bank is often high.
Some banks or mortgage companies will offer a home buyer a loan regardless of credit history. A bad credit home loan, or subprime loan as it is also called, charges a very high interest rate because of the risk the bank takes. If the prospective home buyer chooses this loan, research should be conducted on how to get the lowest rate.
The best option a home buyer has is to build their credit score back up before attempting to buy a home. They should look over their credit reports to determine what they owe and if there are any errors. If errors are found, the companies should be contacted to have them fixed. Paying off existing obligations will also raise the credit score. Other ways can be found to get credit. Getting a credit card and paying it off monthly looks good to the banks and loan companies. According to Realtor, it will take approximately 24 months to see a real change in the home buyer's credit score.Learn more about Credit & Lending