Are you looking to get a mortgage loan but worried about your bad credit score? Do lenders still offer a bad credit score mortgage? If you have a credit score of 620 and below, you are said to have a bad credit score.
But that doesn't mean you cannot qualify for a mortgage loan.
A poor or bad credit score is only one factor a lender will look at to determine if they will approve your loan application or not.
What you can do to help your case is to have a sizable down payment saved up. Try to have at least 20% of the homes value saved up as a down payment. This will help you in two ways. It will show the lender you are less risky and it will also allow you to waive private mortgage insurance, or PMI to save money every month on your mortgage payment.
If you still cannot get approved by a traditional lender, there are many government, state and private agencies that offer financial assistance to those looking to buy a new home. One you may have heard of is the Federal Housing Administration, or FHA.
The FHA makes loans especially to first-time home buyers that need some flexibility in getting their loan approved. So if you have a bad credit score you could still get a mortgage with an FHA loan.
You could also look into a VA loan if you are a military veteran. There are many special programs available through the VA that can help you get into a new home with a low rate mortgage and a smaller down payment required.
The interest rate will be higher because you have bad credit. But as your payment history improves, and your credit score improves, you can refinance your mortgage and get a lower interest rate. This could take as little as two years.
So you see there are several options available for you to become a homeowner even if you have a credit score.
As you work through building up a 20% down payment for a new home, your credit score can improve as long as you make on-time payments to all your creditors and do not apply for new credit in the meantime.
Do not apply for a new car loan right before you attempt to apply for a new mortgage. This will unnecessarily lower your credit score and may prevent you from getting the best rate you qualify for.
You should also have a look into you three credit reports and make sure there are no errors in your file. These errors could be lowering your score through no fault of your own. But if you do not know about them you can correct them.
Use the government's free credit report site to get copies of your credit reports and correct any errors so you can improve your credit score and then apply for new mortgage.
You want to do what you can so you do not have to apply for bad credit score mortgage.
