Conventional Mortgages or Bank Loans

Banks make money by lending other people and business money they allready have. Where do you think banks get money? They are your money earning 2-4% in your savings accounts or CDs. Bank collects this money and then lends it out at 6-12% as mortgages and business loans. The math is pretty simple. They pay less interest and collect more.

There is some risk that comes with lending money. What happens if the loans are not paid back? Most definitely bank will loose money. So to minimize the risk banks look very carefully at the people or companies they lend money to and take assets as collateral for the loans.

That dream home you are planning on buying will have to be the collateral for your loan. You do not have any choice. Bank will not lend you money just based on your credit score alone. You have to show reliable and predictable income to support those monthly payments and give your house as collateral. If for any reason you stop paying the house gets the house.

So to secure a loan from a bank you

• have to have good credit history
• have to have predictable and reliable income
• give your new house as collateral

If you have hit a bump in a road some time in the past and your and your credit situation is not where you want it to be check our if FHA loan, owner financing or rent to own program will put you into your dream home today. You do not continue renting for couple years while you get back on your feet.