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Buying a Chicago home is a difficult choice and knowing whether or not the particular home you desire is affordable is an excellent start, however what many individuals don’t know is that good credit is not a definite requirement in order to purchase a home.  The higher your credit score, the more likely you will qualify for a lower interest rate. Even so, buying a home after bankruptcy is still an option.

Post Bankruptcy Home Loans 

Though home loans after a bankruptcy discharge have high rates, buying a home in Chicago remains an excellent method to quickly boost your credit score; some tips on getting a low credit score mortgage loan:

There are many options available to homebuyers with a low credit rating. Credit scores below 680 do not qualify for prime home loans. Hence, these individuals will need to speak with a mortgage broker or lender that deals with sub-prime mortgage loans. Sub-prime loans are intended to aid those individuals who cannot obtain traditional mortgage financing. These lenders work with all types of people and credit situations. Basically, sub-prime lenders have a multitude of different loan options.

Who Qualifies for a Sub-Prime Mortgage Loan?

Even with a low credit rating, you can get approved for a sub-prime mortgage loan.  If you truly desire taking up residence in a Chicago home there are things you should know before attempting to get a sub-prime mortgage loan, as there are limitations. Many lenders will not approve a mortgage loan if the borrower’s credit score is below 500 as this indicates a high risk situation for the lender. If you are seeking a home and fall into this category you may want consider improving your credit score before applying for a home loan.

Having a chapter 7 bankruptcy, collection accounts, and judgments will not disqualify a buyer from obtaining a mortgage loan with a sub-prime lender. The primary reason is that these types of lenders take on greater risks but with a higher cost to you; increased interest rates.  Although, if the home buyer maintains a good payment history, they will have the option of refinancing for a better rate in the future.

Other Loan Resources Post Bankruptcy
After bankruptcy, homebuyers have the option of obtaining a “no credit-score home loan.” Because lenders do not offer 100% financing on these loans, buyers must be prepared to pay a 20% down payment.

An alternative loan option available is the “zero down” home loan. This loan is offered to buyers with good and bad credit. “Zero down” home loans include 100% financing, which is perfect for first time home buyers and those with little cash savings. To qualify for a no- money down home loan, with bad credit, your credit score cannot fall below 580.