There was a time that seems like decades ago when people with less than pristine credit were not able to get home loans. At that time people with bad credit were all but assured that their dreams of homeownership would never come to fruition. Luckily, for many people, those days are long gone.
Homeownership is possible for people with bad credit and no credit history at all thanks in large part to a multitude of loan packages made available by countless lenders. Good people with bad credit can now get approved for mortgages and despite what you may have heard from a well intended but misinformed friend or family members, these loans can be at very competitive rates.
In today's economy if mortgages were made available only to people with pristine credit, real estate market would collapse. There are simply not enough people in America today with pristine credit. Lenders were forced to create packages available for people with bankruptcies, bad credit histories or no credit histories at all. To remain competitive lenders had to create these packages and you can be beneficiary of them.
Though it is true that some packages remain available only to those with excellent or very good credit, there are just as many, if not more packages that are made available to people with mediocre or poor credit, including past bankruptcy. These packages are available at all different interest rates and nuances that allow greater flexibility in coming up with a package that makes sense for you.
Lenders are now looking at an overall loan application including income, credit history, appraised value of home and selling price. They will examine how recent or far back your credit problems occurred. They will consider instant equity in home (appraised value versus selling price), as well as your income and ability to pay your monthly payments. When looking at income they can, if you want them to, consider all forms of income.
The more recent bad credit in your credit reports are tougher it may be to get approved for some packages, but it is still not impossible. You will want to have a good sense of what is in your credit report so you are prepared to correct any problems in report. There are countless credit repair programs available that will help you improve your credit score.
Past bankruptcies are not necessarily a death sentence for homeownership and depending on how long ago they occurred they may not hinder mortgage process at all for you. It is always important to keep copies of your discharge papers and a complete record of your bankruptcy. Your lender may require copies of some of documentation. They will want to see exactly what was discharged. If there was a mortgage that was discharged in bankruptcy it will impact which mortgage packages are made available to you, but even then there may be mortgage packages that you can still be approved for.