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First time homebuyers with bad credit can find buying a home a challenge. Are you a first time homebuyer who has bad credit? This does not always mean you have to suffer with high interest rates or no mortgage at all. There are many choices out there for both first time buyers and those with bad credit or limited credit. Many mortgage companies or banks specialize in providing loans to first time homebuyers who may have bad credit or no credit and can help you get through the mortgage application process.

You can obtain your 3 credit reports for free here, and also purchase your credit score.

One of the first concerns for first time homebuyers with bad credit is their credit score. Remember that there is not one universal credit score rating, but many different credit scoring systems that are used in the financial world. This makes it difficult to assess exactly where you stand as a borrower.

Because of past overdue charges or high credit card bills, you may have a credit score that is less than perfect. While mortgage lenders will look at your credit rating, they usually examine your credit report more carefully, since they need reasons for granting or denying a loan. This means the mortgage lender or broker who is examining your mortgage application will also look for reasons why you have a lower credit score. Some of the factors that effect your credit score are the number of debts you currently have, this includes all credit card debt, other loans in progress, and any outstanding or past due notices that were reported to the credit bureau. As well, the credit report will show the amount of debt you have accrued and how long it has been since you had issues with bad credit.

If some of your bad credit issues were over a few years old, it may still show in the numbers on your credit report, but the mortgage lender may be willing to take that into consideration. If the mortgage lender asks questions regarding past due notices or accrued debt during your application process, be sure to answer them honestly and promptly so you can move on with the mortgage application process.

In the instance that you are turned down for a mortgage loan because of bad credit, the mortgage lender is required to share the reasons why you have been turned down with the borrower. Usually you will be sent a formal letter giving this information. When this information is sent to the borrower, the borrower is eligible for a free credit report and that will also help you to evaluate your bad credit and see what changes can be made. Sometimes there are mistakes or leftover information on a credit report, so be sure to assess and deal with any discrepancies immediately.

Another important piece of information to keep in mind as a first time homebuyer who may have bad credit is that there are special first time homebuyer loans offered both by lenders and by the government. There are numerous government loan applications available to help you become a first time homebuyer, without suffering because of high interest rates. Most local housing government agencies can give you the information you need to begin filling out mortgage applications. Often the lender will also offer a special mortgage for first time homebuyers, and this loan always takes into consideration that the buyer may be young or without sufficient credit to adequately determine good or bad credit.

One of the most important steps to take as a first time homebuyer, or a buyer with bad credit or no credit, is to research the current interest rates and the different types of mortgages available on the market. Even though there are a great deal of companies and government agencies that are available to help new homeowners or homeowners with bad credit, there are unfortunately some will only be concerned with the profits of an inexperienced new homebuyer. Be sure to check your credit report before you get started and remember that new federal laws have been set in place that require credit report agencies to offer a free credit report once a year. As well, the Truth In Lending Act requires mortgage lenders to be clear and up front about what rates they plan to charge you, so if you are not receiving answers, ask questions or find another lender who will provide you with those answers.

First Time Homebuyers with No Credit or Bad Credit

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First Time Buyers with Bad Credit