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Looking for a Homeowner Loan With Bad Credit? Here's What You can Choose From

Any homeowner with a bad credit knows exactly how difficult it can be to even get approved for a loan. Options still exist if you are in need of a good loan. One of them is getting a loan secured on your property, or a homeowner loan.

One thing that not many realize when it comes to homeowner loans is that you don't have to own a home to get it. You can also be a tenant or a leaseholder. Of course, it will be a little more difficult in this case, but the idea here is that you can use the funds you receive via this loan as a way to secure your own home eventually.

There are three different options for a person who wants to get a homeowner loan: secured, unsecured and co-signer homeowner loans. Let's take a closer look at all three of them:

Secured Homeowner Loan

Most homeowner loans belong to this type. These are also the most advantageous for the borrower, especially if he or she has a bad credit history. As the property is used in this case as a collateral, there is no need for a credit check.  This is the most preferable form of collateral there is and by securing your home on the loan lenders will be much more willing to deal with you.

With this loan, it is possible to get a significant sum of money. The reason for this is that the home equity can be large and this is the main factor in determining the amount of your approved loan.

Unsecured Homeowner Loan

An unsecured homeowner loan is a little more difficult to get than the secured and it can grant you only a fraction of the sum the first one can. As such, this loan option is used not by homeowners, but by leaseholders and tenants.

Compared to a secured homeowner loan, an unsecured one can't bring a large sum approval and the terms may not be the best. However, this type of loan does offer a way to get needed money.

In order to get approved for this loan you have to have a large income, a very good debt-to-income ratio and to be fully employed. Only when the lender is sure that you can make the repayments without hiccups, will he approve this loan for you.

Co-signer Homeowner Loan

The third type of homeowner loans require a co-signer. This is a person that can provide security in case an applicant can't do this for himself (i.e. when he doesn't have sufficient income). In this case, the co-signer will act as a guarantor on the loan and has to make the repayments even when the borrower himself is not able.

This way the borrower can apply for a large loan sum, but the co-signer has to be first approved by the lender on the basis of his larger income and pristine credit score.