Having good credit affords more home loan options. Luckily, many
mortgage lenders understand that bad credit happens, thus many are willing to offer home loans to people with low credit scores. Of course, the best
way to improve your odds of getting a low rate is to boost credit
rating. Still, it is possible to get approved with poor credit. Here are a
few tips to consider when applying for an adverse credit mortgage.
Expect a Higher Mortgage Rate
Although many lenders offer comparably low rates to homebuyers with low
credit scores, these rates are slightly higher than current averages.
Fortunately, because of low mortgage rates, individuals with poor credit
can find affordable homes.
If you had a recently discharged bankruptcy or foreclosure, the rate
you obtain on a home loan may be several percentage points above the
average. Hence, it may be wise to delay buying a home until your credit
improves. On the other hand, if you are hoping to quickly increase your
credit, and you can afford a large mortgage payment, purchasing a home
immediately following a bankruptcy or foreclosure may be an ideal choice.
Take Advantage of Sub Prime Mortgage Lenders
Traditional mortgage lenders typically offer loans to people with good
credit. These persons are considered prime applicants. If you do not
fit into this group, don’t worry. There are many lenders that focus on
bad credit home loans.
Sub prime lenders offer loans to people with all credit types. In fact,
it is possible to get approved for a home loan with very low credit.
This is great because some mortgage lenders do not approved loans to
people with a credit score below 600.
Improve Your Chances of Getting Approved
If you have a very low credit score, it may take some time before you
notice a major credit score increase. Still, you should start improving
credit early. Raising your credit score by a few points may qualify you
for a better rate.
Maintaining good credit is easy. However, you must use credit
responsibly. This involves paying your creditors on time and reducing total
debts. If too much debt is the problem, consider working with a non-profit
debt consolidation service. Furthermore, credit counseling can offer
practical tips on how to better manage credit.
View our recommended poor credit mortgage lenders online.
Carrie Reeder owns ABC Loan Guide, an online resource with information about mortgage brokers online and zero down mortgage companies online.
