Bad credit often leads to more steps no matter the type of financial decision you are trying to make, and obtaining a mortgage is no different. You don’t have to worry, as it is entirely possible for you to buy a home even if your credit is bad.
You can learn more about the home buying process by continuing to read the list below.
Know Your Credit Score
Before you go about with the home buying process, you should be aware of where your credit score currently stands so that you can know what you are getting into.
When you are aware of your credit score and if it is gone up recently, you can know if you can make deals with the lenders.
It is important that you check on all three of the major bureaus as each credit score may differ a bit by a few points.
Make sure that you do not become obsessive about checking it, however, as credit checks actually take a few points away from your score.
One of the best ways to obtain a home mortgage if you have bad credit is to have someone cosign for you. A lender will be more willing to approve a mortgage if you have a cosigner with a better credit report that they feel as if they can trust more.
A cosigner, however, will face the same negative impacts of missing a payment as you will, however, so make sure the cosigner can continue trusting you as well. Try to stay on top of your payments as much as possible so that you do not owe the cosigner anything and so that your credits do not tank.
Go After a Mortgage with Higher Interest
Sometimes, you may find a mortgage lender is more willing to work with you if they give you a higher interest rate. Sometimes, however, the lender may not immediately offer this to you, so start out by contacting them and offering it to them.
The interest rate is meant to protect your lender in case you do miss a payment so that they receive a backup funding source from the higher interest payments you are making.
Pay More on Your Down Payment
Sometimes, a lender is more willing to work with you when you put down more money upfront. This will actually make your mortgage smaller in the long run so that you are borrowing less money overall on your actual loan.
The higher down payment will also show that you are serious about buying the home and that you are doing everything in your willpower to pay off the home. Try to put down at least 20% of the home’s worth in order to offer the larger down payment that you are considering.
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Find a Lender
The final step is to find a lender that is ready to create one of many types of mortgages for bad credit for you. Contact as many financial institutions as you possible can, offering to them any of the terms of a mortgage that are listed above.
Sometimes, you can even get a government-assistance loan that is known as an FHA loan that does not even require large down payment upfront. If this loan does not work for you though, there are other non-traditional mortgages that are available to you as a homeowner.
If none of the ideas work for you when trying to get a home mortgage with bad credit, you may just have to wait. You can start working on your credit to bring it to a desirable place so that you are more likely to qualify for a traditional mortgage.
If you need a home sooner than later though, offer any of the ideas above to any lender that you can get in contact with. You may just find a lender willing to give you the mortgage you need for the home that you desire.
Image Credit: home buying with bad credit by envato.com
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