Bad credit doesnt have to dampen your dreams of purchasing a home. With a little bit of investigative work on your part, you can find relatively low rates. You can also improve your home loan application with a few tricks. Dont forget that you can improve your credit rating in as little as two years and qualify for a low rate refinance package. These three things will ensure that you get your home at a reasonable price.

1. You Dont Have To Pay High Rates

A common misperception is that if you have bad credit, you will pay dearly for a home loan. Even with a poor credit record, you can find sub prime loans only two or three points higher than conventional loans.

Another misperception is that a bankruptcy or late payment means you have bad credit for seven to ten years. Not true. While such information will be on your record for several years, you can still have a good credit rating.

The best way to determine your credit record is to get a free copy of your credit report from the consumer credit agencies. You can also purchase your credit score info, or get it free from a credit monitoring service. With your credit report, you should also check for any errors and get them fixed.

2. You Can Improve Your Application

Your credit score isnt the only thing that affects your mortgage application. Your employment history, assets, and cash reserves are also important.

Having six months of cash reserves, such as savings, CODs, or money market accounts, can also qualify you for better rates. Down payments will also affect your rates. The larger the down payment, the better the rates.

Picking an adjustable rate mortgage is also easier to qualify for since monthly payments are relatively low with this type of financing. Just be prepared for larger monthly payments if market rates rise.

3. You Can Have Good Credit In Two Years

Once you have signed for your mortgage, remember that you can refinance in two year for better rates. During that time you can improve your credit score by making regular monthly payments and paying off short term debt.

Before signing for any mortgage, first check the rates of several lenders. A little comparison shopping now can save you thousands of dollars in the future.