Many home owners that have less then perfect credit still find themselves in the same situations as home owners with good credit.
There will always be the need to pull cash out of their hometo pay off credit card debt, pay for college or do major home repairs.
While the interest rates on a mortgage loan for bad credit may not be low they do offer the ability to get financed even with late payments and a low credit score.
Using a Sub Prime Loan Although the sub prime home loan has gotten a bad reputation recently it is actually a very good financial tool if used correctly.
For example if a home owner has excessive credit card debt at 25% then it makes perfect financial sense to refinance that debt into a mortgage that has a rate of 9 or 10%.
The benefit to this is that by paying of the credit cards the borrowers credit score normally increases and with timely mortgage payments many borrowers are able to get into a conforming mortgage with 12-24 months.
When using a sub prime mortgage loan for bad credit it is a smart choice totake a slightly higher fixed rate over the lower rate short term adjustable mortgage.
This will allow you as much time as you need to turn your credit around and not just 2 or 3 years that the ARM would give you.
However once out of debt you are going to have to examine your financial habits and be honest with yourself so you do not end up with more credit card debt in a few years.
By using a sub prime mortgage loan for bad credit to pay down your debt and restore your credit you will be on the road to financial success, but only if you can avoid the mistakes you made that drove you into debt and your credit score down.