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    Buying a Home With Bad Credit

    December 18, 2017 By CHamler

    We all want to have our own house. That’s the American dream. To achieve that you need a loan. Unless you can pay for the property in full upfront, you will need to get yourself a mortgage.

    Your credit score is one of the most essential determining factors if you qualify for a home financing or not. The stronger your credit score, the bigger chance for you to get a good loan.

    But what if you have bad credit? Is this going to be the end of your American dream?

    When is credit bad?

    Your credit score is derived and calculated based on your credit report information. When debts are handled better, your score will be higher. Mortgage lenders use both your credit score and credit report to determine the borrower’s level of risk.

    850 is considered to be the perfect credit score. However,  very few reach such credit score. If we were to put it in a range, 740 and up is the best range, especially for mortgages. A score of 660 will get you a loan with a good interest rate. As the score goes higher, the rates become more and more attractive. While some lenders still offer loans to borrowers with a credit score of at least 620, going lower than that is already considered bad credit.

    Most lenders may refuse to make someone a home financing program if they have bad credit. Some mortgage lenders may offer you a loan but to compensate for the high risk, you may get high-interest rates or may be asked for a large down.

    Buying a House When You have Bad Credit

    Here are some tips to help you get the lender to offer a  better mortgage deal while you work on boosting your credit score:

    Talk to a Lender About It

    Be able to talk about your credit issues with the lender. And while having a conversation over the phone may work, it is best that you discuss this upfront.

    The blemishes on your credit may be due to some unfortunate event or may be caused by the lack of sufficient history. You can tell the lender all you honest reasons for the slow credit score. Discussing this with your lender face to face will allow him/her to to read your emotions. They can tell whether you’re just making it up or are genuine with everything you’ve told them.

    Be sure to have an honest discussion about the issue and they may be able to consider these reasons when offering you a mortgage or give you alternative ways to get approved.

    Find the best mortgage rates, click here.

    Pay In Full, On-Time Each Month

    This is the easiest way to boost your credit score.

    Being responsible in dealing with your debt will help improve your credit. If you want to go the extra mile and you have some cash to spare, you can pay a little more than the due amount. But if you can’t, staying consistent on your monthly payment will already have a huge positive impact on your credit report and score.

    Show Strong Employment History

    Lenders will want to see that you can make mortgage payments consistently. One way of telling is if you have a long and stable employment history. They also want to make sure that you can continue earning the same amount of money in the future. Again, the lesser the borrower’s risk, the better the offer. If you have a stable income source, lender’s will consider offering you a better loan.

    You have to have at least two years of employment in the same field. If you have been working with the same employer in that span of time, so much the better.

    Connect with a lender, click here.

    Save up for a Larger Down Payment

    Come up with a larger down payment. A down payment that’s 20 percent of the home price is the ideal for people with good credit scores. For someone who has bad credit. The down payment has to be bigger than that.

    A larger down payment makes up for the risk for having a low credit score. This shows the lender that even with the credit issue, you’ll be able to handle the monthly mortgage payments.

    Fix Entry Errors on Your Report

    You may not realize this, but ridding your credit report with errors will have a great impact on your score. File a dispute to your credit reporting agencies. These errors on your file are very detrimental to your score, so you have to have them removed as soon as you detect one. Make sure you know the agency’s instructions in filing disputes as each has its own process.

    Click to See the Latest Mortgage Rates»

    Filed Under: Credit Repair Tagged With: Bad Credit, Homebuying, Rebuilding your Credit

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    IMPORTANT MORTGAGE DISCLOSURES:

    When inquiring about a mortgage on this site, this is not a mortgage application. Upon the completion of your inquiry, we will work hard to match you with a lender who may assist you with a mortgage application and provide mortgage product eligibility requirements for your individual situation.

    Any mortgage product that a lender may offer you will carry fees or costs including closing costs, origination points, and/or refinancing fees. In many instances, fees or costs can amount to several thousand dollars and can be due upon the origination of the mortgage credit product.

    When applying for a mortgage credit product, lenders will commonly require you to provide a valid social security number and submit to a credit check . Consumers who do not have the minimum acceptable credit required by the lender are unlikely to be approved for mortgage refinancing.

    Minimum credit ratings may vary according to lender and mortgage product. In the event that you do not qualify for a credit rating based on the required minimum credit rating, a lender may or may not introduce you to a credit counseling service or credit improvement company who may or may not be able to assist you with improving your credit for a fee.

    Copyright © Mortgage.info is not a government agency or a lender. Not affiliated with HUD, FHA, VA, FNMA or GNMA. We work hard to match you with local lenders for the mortgage you inquire about. This is not an offer to lend and we are not affiliated with your current mortgage servicer.

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