There are many lenders in todays market that can help a person who had some event that caused them to either file bankruptcy or get behind on the bills. These lenders are called subprime lenders and many have really agressive programs.
When considering getting a mortgage with poor credit it is often important to employ a long term strategy. One such strategy might be to take a two year fixed subprime loan and pay off consumer debts through the loan. With the debts paid off and better monthly cash flow the borrower should have a much better credit score two years down the line. At that time the borrower can refinance into a more permanent financing program such as a thirty year fixed.
The best way to get a Mortgage with poor credit, is a large down payment. The more money you put down, the easier it will be to get a mortgage. But even if you can not afford a large down payment, there are loan programs for people with poor credit and there are also down payment assistance programs.
Banks evaluate the credit worthiness of a loan application by three major criteria, credit, income, and assets. Potential home buyers with bad credit profiles should scrutinize their other two aspects. A mortgage applicant with poor credit can most likely get home financing if his income is proved to be sufficient to repay the loan and his other debts, and if he has ample assets as reserves after making a large down payment towards the house.
There are many sub-prime and niche lenders available to people with poor credit. These lenders have very aggressive programs available to help almost any borrower. There are even programs available for 100% financing. A qualified mortgage professional will be able to find you the best lender to fit your particular situation.
You may want to consider professional credit improvement programs, which can boost credit scores to qualify for bad credit mortgage programs
Alot of times credit issues can be resolved fairly quickly with systems that lenders use like "Rapid Rescoring".
Some loan programs will allow you to purchase or refinance one day out of bankruptcy (some up to 100% loan to value) and others will allow a bankrputcy buy out to refinance (Chapter 13). If you are looking to do a bankruptcy buy out, you must first get permission from the bankruptcy judge and make sure your payments on the plan have been current for at least 12 months. By rolling the bankruptcy into your mortgage debt you could save hundreds every month. It is also a good idea to think about debt consolidation before filing for bankruptcy. It could save you money and not hurt your credit like a bankruptcy will.
Consider using a 401k loan, or withdrawl, in order to come up with a good sized down payment on a home to help you qualify for a loan with less than perfect credit or even very bad credit. Many times you can get away without being penalized by the IRS if you use a 401k withdrawl for a down payment for the purchase of your first house.
If you you have
consulted with your mortgage professional and are still having trouble buying a home with poor credit, consider looking into buying a house through a land contract. With a land contract you buy the home from the seller, however the seller retains the mortgage loan and you agree to make monthly payments of a certain amount to them for a certain period of time. You do not take title to the property until you obtain your own financing on the property.
An important part of getting a mortgage with less than perfect credit is to make sure that you are paying your rent on time and by a check. This will show the lender that you have the ability to pay as some mortgages are based solely off of the rent history.
One large issue the undewriters look at is the reason for the damaged credit. If it was due to a job loss then the underwriter focuses attention on your employment. If it was due to just not paying bills on time then focus begins to be on debt to income ratios. The reason is often outside of your control. If you got in an accident and had mounting medical bills that forced you into bankruptcy its likely it won't happen again. So clear letters of explanation are needed when damaged credit is involved with a loan. The reason for the loan is important as well. Is it for a purchase, refinance, home equity loan? All these questions must be answered in the mind of the underwriter.
If you have poor credit, but are willing to take the necessary steps to improve your financial situation, you could be closer than you think to qualifying for a home loan.
If you have a client with a FICO bellow 560, low LTV, and are looking to refinance Call 877-712-3227 ext.2. Advantage Capital Equity Solutions has a program for you.
If your credit is so bad you cannot get approved for a mortgage you may want to look at "land contracts" or "lease options". This will give you some time to repair your credit while still getting into a new home!
You can ruin your credit score in the blink of an eye, and it may take years to build it back up. Although you may still be able to get a loan, you'll probably pay a lot more for it. Do yourself a favor and try to maintain a good credit score.
Lenders do make exceptions on an individual basis when reviewing your credit profile when it comes to approving a loan. A mortgage professional can represent your case and explain your circumstances to an underwriter.
Getting a mortgage with poor credit is possible because of the numerous mortgage products available. Contact a mortgage professional to see which mortgage loan is suitable for your circumstances.
» DISCLAIMER: The information contained in this article on 'How Can I Get A Mortgage With Poor Credit ' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.