Your credit history is one of the key factors that mortgage brokers consider if you are applying for a mortgage. But if you find yourself on the lower end of the credit score spectrum, don’t get worried – homeownership could still be possible for you with bad credit homeowner loans.
With rent on the rise and home prices increasing, 2017 is a great time to buy a home. So don’t allow woeful credit keep you out of the market. Below are a few tips for approaching the mortgage process if your credit history is lower than you’d like it to be.
Know What Credit score You Need
Your credit history affects whether you can get approved for a home loan as well as what your interest will be. Higher credit scores will generally give you more mortgage options. At Quicken Loans, a credit history of 660 or more will give you a wide range of options.
If you’re enthusiastic about a bad credit secured loans, you’ll desire a minimum credit score of 620. However, you can be eligible for an FHA loan with a report only 580.
Discuss Credit Problems with Your Mortgage Lender
Talk to your mortgage company about your credit history. Perhaps your credit history is because identity fraud or previous difficulties that no more impact your financial stability. Make sure to have your payment data and other paperwork beside one to help verify your circumstance for a mortgage.
Get Credit Errors Fixed
Carefully review your credit file to ensure its accuracy and reliability. Keep in mind that the amounts shown may be slightly off credited to recent repayments which may have not yet been documented. In the event that you do find one in your survey, you can send a written dispute letter to get it fixed. This is worth the effort as it might raise your credit score and open up more bad credit homeowner loans options to you. See more.
Make a Larger Down Payment
You may have the option to compensate for your low score by putting more money down. This makes you less dangerous to your lender as you should have more committed to the home and be less inclined to walk away from it.
If you don’t have the money for a huge down payment on hand, look for assets that you can liquidate without taking large loss. For example, your retirement profile could be a source of cash for your deposit.
Take a Higher INTEREST
If your score is high enough, you can apply for a mortgage now and agree to a higher interest rate. If you rebuild your credit over the next few years, you might be in a position to refinance your home at a lesser interest rate. One thing to bear in mind is that you haven’t any promise that lower interest rates will be accessible as you prepare to refinance.
Get an FHA Loan
You can be eligible for an homeowner loans with a score only 580. An FHA loan can also be beneficial because it permits a co-borrower who does not reside in the home. This means that a trusted friend or family member can cosign your loan so you can become a homeowner.
Rent and Repair Your Credit Score
If now isn’t the right time for you, another option is to rent for several more years while you rebuild your credit history.
Paying more focus on your finances is vital to improving your credit history. Don’t let a minimal credit score stop you from purchasing a home. First, find out where your credit stands with a free credit report from homeowner loans. Learn more details at: https://www.opalloans.co.uk/unsecured-loans