LESS THAN PERFECT CREDIT - If you have less than perfect credit, you can get a loan.Loan applicants with bad credit should expect to pay higher interest rates than borrowers with good credit history. Lender banks surcharge for higher risk loans.
Unless your credit is truly horrible, you can probably get a home loan. You will, however, pay a high rate of interest and your loan will likely be an adjustable rate loan with a two year fixed term. But, take that loan and start repairing your credit so you can refinance after two years into better terms. Set a budget and stick to it, stop using credit cards, and consider meeting with a financial planner who can assist with these steps.
Over the past few years lenders have come out with new programs to fit nearly every type of customer. Even if you have a recent bankruptcy there are many lenders who can approve you for the purchase of a new home, in some cases as soon as 1 day after your discharge.
Less than perfect credit can be caused by having to many inquiries in a short period of time. Inquiries account for 10% of your total credit score. If you are shopping for a mortgage, a new car, and more credit cards then the variety of inquiries will pull down you credit score more severely.
Many Americans out there think that they need to continue renting and they will never be able to realize the great American dream of homeownership. This however could not be any further from the truth. There are home loans out there for people with all types of credit and there are many mortgage brokers out there who can assist, educate, or direct consumers on what to do or where to go to help increase their credit scores so that they can qualify for financing that makes sense to them. There are many short term programs out there to assist people into getting into a home and then within a couple of years you can refinance out of the short term program into something a little more long term with much better terms. Consult a mortgage consultant now to find out what you can qualify for.
Understand that having bad credit is still undesirable. Even though you can get a loan, the terms won't be as favorable as if you had good credit. You may not be able to get 100% financing, a low rate, or low closing costs. If this is okay with you, then call me today at 888-418-4467, and I may be able to help.
If you're looking to repair your credit, you might consider a Consumer Credit Counceling agency.
Consumer counseling can hurt your credit in the short term. It will show up on your credit report. However the long term benefits should greatly outweigh this.
You can email me at dave@gofirstsecurity.com if you have any questions about what may or may not help to improve your scores.
FICO scores, also known as credit scores, can range from 300 to 850 with 850 being perfect.
The average score in the US is about 720.
Even with an average credit score, which usually has a few dings, you can qualify for great rates on a mortgage.
Many people assume their credit is worse than it is. Late payments are not counted as being late by the credit bureaus until they are 30 days past the due date. Making minimum payments every month does not hurt your credit score. Carrying balances on your credit cards does not negatively affect your credit score, and may actually help it if your balance is between 30% and 50% of the credit limit for that card.
Purchasing a home with less than perfect credit - It is possible to buy a home with credit that is not perfect. It is even possible to buy a home with flawed credit or below average credit and put little to no money down. Millions of homeowners have bought homes while having credit that is somewhat flawed or below average. Consult a mortgage broker to find out how much of a home you qualify for, how much of a down payment may be needed and what types of home loan programs are available with your exact credit scores.
Obtaining a new mortgage is a great opportunity to build a strong credit history and higher credit scores. After 2 or 3 years of on time payments marginal credit scores can really see an increase. To take full advantage of this opportunity you must make every payment on time and try not to acquire any new debt.
Many people believe their credit score will be worse than it actually is. Others believe they have good credit, but their credit score is actually low. So, the first step is to have your mortgage professional run a credit report on you and review it with you. Then he can gather some information from you and present you with some financing options based on your specific situation.
Refinancing with Less Than Perfect Credit - Many homeowners mistakenly believe that they cannot qualify for a refinance or benefit from one because they have a less than perfect credit history. The fact is I have hundreds of loan programs available for borrowers who have had credit difficulties. A mortgage professional such as myself can analyze your individual situation and advise you if changes in your mortgage situation would benefit you.
Sometimes, all it takes is a little creative thinking for a loan to work. A good broker knows that not all people fit into a cookie cutter mold and that sometimes, you have to think outside of the box.
Most local banks will not deal with consumers with below average credit. This is one of many reasons that working with a mortgage broker can help you. Mortgage brokers have programs for below with excellent credit, less than perfect credit and downright bad credit. Not only do they have loans for all different credit types but they also have loans for all different income types. They can mix and match these types of loans together too. An example is if you were a self-employed individual and it was hard to document your income and your credit was below average, a mortgage broker may find the loan that suits you best is a sub-prime loan that will allow you to use bank statements as income documentation instead of W2's, tax returns and pay-stubs. Therefore, there are many choices available to consumers with less than perfect credit.
Use your new mortgage to build a better credit score! It's not easy, but making every mortgage payments on time for 24-36 months can help build higher credit scores. For this reason, many people will initially take a 2-year ARM or 3-year ARM, build a string payment history (and higher scores), then refinance into a lower, fixed rate mortgage. Managing credit properly requires persistence but allows you to save thousands of dollars in the long run.
Working with a broker means that you can often get approved for loans that you might not be able to otherwise. Most brokers work with as many as several hundred lenders, and have access to the loan programs from all of those lenders. This means that they can probably approve you for a loan, even with less than perfect credit.
Does your credit report contain errors? If so it could result in you over-paying on your next mortgage. Correcting mistaken accounts can take time so the process should be started as soon as you recognize the mistakes. Common mistakes are duplicate accounts, old accounts that have not been updated, or accounts that are marked "open" when in fact they have been paid and closed.
Refinancing with less than perfect credit typically comes with higher interest rates and substantial prepayment penalties. Borrowers should consider these "Subprime Loans" when they have FICO scores below 620.
