Buying A Home With A Less Than Stellar Credit Rating

Are you starting to consider buying a home?  If so you have probably heard how important your credit score is in obtaining a mortgage.  It is possible that you may have been previously turned down for a home loan because of your poor credit.  Or that you have pulled your credit report to realize that your credit rating is far worse then you thought it was.  Whatever the case may don’t give up on buying a home just yet.  Even with a credit score that is too low for a conventional thirty year mortgage there are numerous options you can look into for financing a home.  You might be surprised by what a mortgage broker can do to help your situation.

First off be aware what lenders are looking for when lending money to individuals for a conventional mortgage.  A general rule of thumb is that a borrower should consider saving at least twenty percent of homes price for a down payment and a FICO score of about six hundred fifty to receive a conventional mortgage with a low interest rate.

There are a host of things that lenders look at when deciding whether or not a borrower is a worthy risk.  One of the major factors, as previously discussed is a person’s credit score.  Another element that borrowers use is the amount that borrowers have for a down payment.  It is possible to offset a lower credit score with a higher down payment.  Lenders are apt to believe that you are less of a risk the more equity that is invested into the home.  Your personal interest in the home is greater and therefore lenders believe you are a better risk.

If you have a less than perfect credit score and a small down payment don’t count yourself out of the mortgage game yet.  Talk with a mortgage broker about various non-conventional loan options.  Some options include: FHA loans, VA loans or U.S. Department of Agriculture loans are all options with less stringent guidelines then conventional mortgages.

If none of these options pan out consider working on getting your credit score up, saving money and working towards financing a mortgage in two to three years when your financial situation has recovered.  There are many ways to work towards a better credit score including:

• Take care of correcting errors in your existing credit report especially with collection agencies and late payments.
• Make payments on time all the time.
• Pay down the balances on revolving credit cards to decrease your debt to income ratio.
• Give yourself some time to build your savings.

Work with a mortgage broker to discuss options that are available today.

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/.