Getting A Mortgage With Less Than Perfect Credit

Many people seeking to purchase a home think that because of their less than perfect credit score that they are not going to be eligible for a home loan.  This is no longer the case.  With less stringent requirements, more flexible mortgage options and historically low interest rates on home loans getting an affordable home loan even with a low credit score is feasible.  Here are a few things that you will need to take into consideration if you are seeking a mortgage with a low credit score.

• Be Prepared To Pay More

Although homeowners with bad credit can be approved for mortgages it is important that they realize they will be paying more than those with decent credit scores.  Be careful when seeking out a mortgage broker to be sure you are working with a home loan officer looking to provide you with the best mortgage for you.  Watch out for dodgy characters looking to prey on individuals who they view as less than financially savvy because of their low credit scores.  This is often the perception of buyers with less than perfect credit scores.

• Refinance As Soon As Possible

Don’t think that a low credit score means you are signing your life away when you purchase a home.  Buying a home should never be viewed as a bad deal.  It does however mean that you need to maintain and improve upon your credit and refinance as soon as you are no longer viewed as a risk to lenders.  This can take as little as two years if you are consciously working to improve your debit to credit ratio.  A home loan when you have a low credit rating should be seen as a short term solution that is used to get you into a home while you work on improving your credit.  It is always a better solution to sock away money into the equity of a home than wasting money on rent payments.

• Understand Your Options

Work with a mortgage officer that specializes in obtaining mortgages with less than perfect credit.  Ask about the available options.  Although thirty year fixed mortgages are popular this does not mean it is the right option for your situation.  An adjustable rate mortgage may be a better option while you work on fixing your credit score.  Many people fell on hard times during the recent recession that are not typically bill skippers.  Hard-working, responsible people often have legitimate reasons for falling into a vicious cycle of late payments.  Consider all of the options you have when you are looking to become a new home owner.

• Obtain A Co-Signer

If you have a substantial number of assets with equity you may not need a co-signer even with poor credit.  Items such as motor homes, cars paid in full all work as forms of collateral against default on a mortgage and are seen as beneficial to lenders.  However, if this is not the case you may need to look for a relative who is willing to sign on your behalf.  A co-signer is essentially agreeing to make payments on your behalf if your loan should default at any time.

Although homeowners with credit on margin will pay lower rates than those with less than perfect credit it is possible for most everyone to obtain a mortgage in 2016.

Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at http://brightoncrosscountry.com/.

Low Credit Scores Do Not Mean You Will Be Denied A Home Loan

Consumers with a low credit score fear loan denial which often prevents them from applying for a mortgage.  In 2016 the fact that you have a low credit score should not stop you from meeting with a mortgage broker to discuss options available for consumers with credit scores below six hundred.

The higher the credit score; the more likely it is consumers can repay the loan according to most mortgage lenders.  This does not mean that consumers with less than perfect credit should not consider buying a home.  What it does mean is that homeowners with credit scores under six hundred need to keep in mind a few things as they go through the process of buying a home.

Lenders are loosening their credit requirements for homeowners.  In fact thirty three percent of mortgages in the spring of 2014 were given to borrowers with credit scores below seven hundred; a six percent increase from the previous year.  Mortgage lenders are relaxing their credit score requirements and beginning to lend money to homeowners with less than perfect credit scores.  This is especially true when borrowers opt for government-insured FHA loans.  Homeowners with credit as low as five fifty, with down payments of ten percent are getting mortgages.

When consumers are looking to purchase a home with less than perfect credit there are a few things to consider.  One is that lenders are slowly becoming less strict with requirements on consumer credit scores.  Another is that lenders are becoming aware that there is a difference between applicants who are just irresponsible in making payments on time and applicants who have fallen on hard times with the loss of a job or astronomical medical bills that create an unreasonable debt demand.

When it comes to having less than perfect credit scores, lenders are becoming more and more concerned with payments that are being made on time.  When an applicant is making payments on time, especially rent payments, lenders are more willing to consider lending to them.

Working with a mortgage broker helps consumers looking for a mortgage with less than perfect credit.  There are two different methods uses when approving and denying mortgage.  Lenders either approve or deny your mortgage based on automated or manual underwriting.  When a client is considered a worth credit risk mortgage brokers will initiate conversation between lenders to get them to look at more than the client’s approval or denial within the automatic mortgage approval system.  In these situations mortgage lenders are prompted to look into the other qualifications borrowers bring to the table.

Just because your credit is less than perfect it should not prevent you from at least meeting with a mortgage broker regarding the options that are available in your situation.  A lender may offer you a mortgage with a higher interest than those consumers with impeccable credit.  This however does not lock you in forever.  As you continue to get your credit in check your score will increase and overtime this will allow homeowners with higher interest mortgages to refinance their current mortgage at lower interest rates.

Cross Country Mortgage in Brighton, Michigan provide mortgage services for clients including new home loans, refinancing, reversed mortgages, new purchase home mortgages and home equity loans to the entire Livingston County area including Brighton, Howell and Livingston County. Cross Country Mortgage Brighton, MI at http://brightoncrosscountry.com/.