Mortgage Lenders

Low Credit Score: Can You Get a Mortgage?

Finance

Credit rating is one important factor in qualifying for a mortgage. In most cases, lenders require borrowers to have a minimum score of 680 to obtain a loan. It is, however, possible to qualify for a mortgage with bad or low credit rating. A low credit score falls in fair (601 to 660) and poor (501 to 600) ranges.

Available Loan Programs

The Federal Housing Authority (FHA) mortgage programs can be ideal if you have lenient qualifications. Primary Residential Mortgage, Inc. and other mortgage companies in Lake Oswego note that this allows borrowers to get a mortgage even with a score as low as 580, but shouldn’t have unsettled outstanding bills or late payments in the last year. There is also the Veterans Affairs (VA) loan program, which requires a score of at least 620.

The Waiting Period

In some cases, there are major credit issues that will require you to wait a period of time before applying for the loan. This depends on the type of mortgage. With a foreclosure, for instance, you need to wait two years for both VA and FHA loans, and seven years for conventional mortgages. This can be shorter if you have suffered from extenuating circumstances. The waiting period will then be one year for FHA and, and three years for conventional.

Explaining the Low Score

You may need to written summary or explanation before submitting a loan application. Be sure to write an honest explanation of the credit issue or any hardship you have suffered. Don’t try to make excuses or be defensive. You should also take note of the steps you have taken to increase your score. A clear and a helpful explanation can improve your chances of getting a mortgage approval.

Whether you’ll be qualified or not will depend on the mortgage lender. In most cases, if the lender sees potential problems with your situation, they will not offer you the loan. If you can get a mortgage, it is important to understand different loan options, as well as their terms, payment, and interests.

Speed Through the Mortgage Application Process

Finance

Mortgage in OgdenMany people neglect their financial conduct when making a mortgage application, and it lowers their chances of success. With the lifespan of a mortgage spanning up to 30 years, getting friendly interest rates set you off to a great start. In fact, the interest rate on your mortgage determines the success of your home owning process. As such, you should dig deeper into the factors that determine the mortgage rates in Ogden and make sure to get them right.

Improve your Credit Score

Your credit score is a summation of your financial conduct and keeping it high is great. A high score entitles you to lower interest rate, translating into considerable savings over the life of your loan. It also keeps your monthly repayments low and affordable, leaving you with sizable disposable income. For instance, getting a home loan of $300,000 with a credit score of 760 entitles you to 3.3 percent interest rate. On the other hand, the same loan carries 4.8 percent interest rates on a credit score of 620. The 1.5 percentage difference could lead you to incur an additional $100,000 bill over the life of the loan.

Pay your Bills

At the very least, your lender needs you to demonstrate the ability to keep on top of your bills, especially rent. After all, they soon join the list of your creditors. As such, you need to impress them with your ability to pay your debts. Unpaid overdue credit card bills and the resultant penalties reflect on your financial records. It is a clear indication to the lenders that you are struggling to stay ahead of your current debt burden. As a result, they are unlikely to indulge your request since you are likely to default on their payments as well. With a myriad of applications coming their way, lenders will prioritize borrowers with a clean financial record.

As much as mortgage application is a business transaction, you need to demonstrate merit when making one. A sound financial history is a great ally that makes the process cheaper and affordable.