How to Get a Home Loan With a Low Credit Score
When you have a very low credit score, trying to get a home loan will not be as easy as you would think it is. You might have recently faced bankruptcy and now need a mortgage lender. In some cases, it may be almost impossible. However, nothing is truly impossible. Everything simply takes time, patience, and responsibility. In addition, you may have to watch out for bad lending companies. These companies will offer you loans that are extremely dangerous to your financial health. This is mainly because all of the penalties and fees may be so high that you will end up facing foreclosure.
Home Loans With Low FICO Scores
Before you even begin to look for a home loan, you need to check your credit score. In many cases, your credit score may not be as low as you think it is. If your credit score is lower than 620, you have a horrible credit score and getting good home loan interest rates are next to impossible. It will truly take some time for you to obtain a home loan. If your credit score is somewhere between 620 and 680, then you still have a chance at a home loan. It may not be the best score and you may have to work harder but it will be possible for you to get a home loan. Having a credit score of 700 or more means you are in good standing with the credit companies.
Next, you will need to work at raising and improving your credit score. This is where most of the hard work will come in. You will need to pay off all of your credit card debts and any other type of debt that you might owe. In addition, make all of your accounts current. If your credit score is below 620 you will need to work very hard at raising your score.
Work on a budget that will help you figure out what you can afford to pay when you begin to pay monthly mortgage payments. Make sure that you only do this after you have already raised your score. If you have too much debt to handle at once, then you may need to take some more time. You may not be able to afford a home loan.
Save money for a significantly large down payment. Remember that the more money you put down on your future house, the more likely you are to find a favorable lender. This is because it shows your lender that you are gaining the financial responsibility that is required to pay them monthly payments.
Remember that you will probably have a high interest rate on the loan. This can be somewhat solved if you put down a large down payment, but it still will be high when compared to other loans. In order to make sure that you do not put yourself in debt, make sure that you keep track of all of the fees, penalties, points, and closing costs on your home loan.
Getting Home Loans Using Old Home As Collateral
If this is your second home purchase, then you should be able to get a personal loan with your first home as collateral. Read more about putting your home up for collateral.
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