If you don’t have good credit and still want to buy a home, some lenders are flexible if you can give a good explanation for your past problems. Unfortunately, other lenders take advantage of your financial situation. These people offer bad deals or loans with terms you can’t pay, no matter how good the deal sounds.

The more you know, the more you can protect yourself from unscrupulous lenders:

Get it in Writing

You have a legal right to have – in writing – the total cost of the loan, the annual percentage rate, the monthly payments, and how long you have to pay back the loan. Always ask questions until you understand everything.

Don’t sign anything you don’t completely understand.

Always assume that any paper you sign is a contract. You can ask to change anything in a contract that you don’t like or can’t agree to. If the lender won’t change the contract to your satisfaction, get a loan somewhere else. Before you sign the loan papers, ask a lawyer or trusted friend to go over them with you. Don’t sign a document with blank spaces – all spaces should be filled in before you sign.

Shop around and understand the total cost of the loan.

Comparison shop to get the loan with the best terms and fees. The total cost of the loan includes the monthly payments, the interest, and any other extra costs like property insurance. It’s very important to compare the costs, especially the monthly payment, to other lenders. If there any fees and points involved, ask the lender to explain them to you until you understand.

Make sure you know what the loan is covering in terms of fees and costs.

Your loan should only include the actual amount you’re borrowing, not the interest or property insurance. It should not include life, disability, or property insurance or any other products you don’t understand or want. This insurance only protects the lender, not you.

Don’t agree to lie on loan documents.

Don’t let the lender pressure you into making false statements on your application. Make sure all documents are complete, truthful, and have the right dates.

Don’t feel pressured – if you’re not sure, don’t sign.

Ignore high-pressure sales tactics and be leery of advertising promising "No Credit? No Problem!" Talk to aconsumer credit counseling agency or non-profit housing counselorif you’re not clear and need help finding a fair loan. Feel free to ask these people if the companies offering you loans have had any complaints filed against them.

Additional Resources

To learn more about predatory lending and to find resources to help in your local area, see www.hud.gov (this will open the U.S. Housing and Urban Development website in a new window).