by The Literature and Media Alternative

Created on: August 17, 2007   Last Updated: January 07, 2008

Isn't it an unspoken rule that if you have bad credit you stay far away from lending institutions? Many consumers feel that way and may feel doomed to live in an apartment for the rest of their lives, figuring the nicest houses are built for families with perfect credit and high income levels. However, the fact is that there are many consumers who deserve a second chance, even if their credit is questionable. Medical bills are astronomical in this day and age, and if a person has had emergency surgery (and is not a doctor himself) then repaying those bills with a regular-income job could be impossible. Credit can also be ruined by divorce, as well as many other possible scenarios. In other words, bad credit does not necessarily mean a potential homeowner is unwilling or unable to pay for a mortgage.

Good News And Bad News

It's true, many financial institutions scrutinize credit not only the overall credit score, but all of the past accounts that have not been settled. A charge off, bankruptcy or a civil judgment looks very bad in the eyes of a lender, far more than unpaid medical bills. Bad credit is all more worrisome to a lender who is going to be financing a home for a relatively short term, such as 15 years or less. The lender has to have full confidence based on a buyer's history that he or she is capable of making high monthly payments. While someone with sketchy but still adequate credit might still qualify for a loan, even so, the down payment will be much higher, as will the interest rate. The best thing to do if you have questionable credit, as opposed to bad credit, is to settle your outstanding accounts and qualify for the best type of loan possible. However, some consumers will not be able to improve their credit score, particularly if the creditor has charged off the account. Are there any options left?

Lending institutions realize that consumers with bad credit still have money, and so they are still an important part of the real estate market. Today's competitive mortgage lenders offer many different plans for different circumstances, including buyers with questionable credit. There is such a thing as a "bad credit home loans" which are exclusively designed for consumers with less than perfect credit and help to consolidate their debt, while keeping monthly payments as low as possible. These programs can also help with refinancing or if you are seeking a second mortgage, or home equity loan. Cash out refinancing is a very popular plan, which allows

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