Are you wanting to buy a home but have bad credit? Don’t let your credit score slow you down, because there are ways people just like you get mortgages for bad credit every day. In fact, most homebuyers don’t have perfect credit. More than 60 percent of homebuyers have a credit score that falls between 700 and 800. Mortgages By Jill offers information and resources to help you know the best things you can do to get a mortgage and fulfill your dream of owning your home.
How low is bad credit?
If you’re unsure where your credit score falls on the spectrum, a score between 580 and 669 is considered fair, while anything below 580 is poor. Anything above 670 is classified as good, very good, or excellent. If you’re concerned about your credit score, there are still options out there for you. Specific types of loans and lenders require a minimum credit score. For homebuyers who have credit below 600, your best options would be to ask your lender about FHA and USDA loans. FHA loans require a minimum credit score of 500, while USDA loans have no minimum requirement. However, a lender may have its own minimum score requirement. VA loans do not require a minimum score as well, so be sure to ask your lender about what it takes to meet the specific requirements for these loans.
Know your options
Like any other major decision you make in life, it’s important to do your research and figure out what options are available beforehand. Know your credit score and understand the options that are available to you. It’s also to gain a strong understanding of what you’re getting yourself into. If you’re looking to get a mortgage with bad credit, be aware that you’re much more likely to get handed a high interest rate. While your mortgage broker can help you get the lowest available rate, you’re likely not going to get a rate as low as somebody who has a better credit score.
Save for a large down payment
A great way to show a lender that you’re in this mortgage for the long run is to save a large down payment. Putting at least 10 percent down on your home is a good place to start. This means that if you’re looking to buy a home that costs $150,000, you’ll want to save at least $15,000. Does this take time? Yes. Is it worth it? Absolutely. Lenders like to see that buyers have a personal investment in your purchase, so you’re more likely to get approved for a loan with a sizable down payment.
Pay down debt
The best way to get a home loan with bad credit is to improve your credit. You can do this by making a concerted effort to pay down your debts. Something that lenders consider when approving or denying mortgages is your debt-to-income ratio. By paying down your debts and improving your ratio, you’ll be much more likely to get approved for the loan for which you’re applying.
Get a cosigner
There are times when you simply haven’t had a chance to improve your credit. Maybe you’re young and have not had any debt yet, but you are in a place financially where you can afford to buy a home. Get a cosigner to help. A cosigner gives a lender peace of mind that there’s a lower risk of defaulting on your loan.
Contact Mortgages By Jill
Jill Burgess of Mortgages By Jill has funded over $2 billion in mortgage loans over her 30-year career. You can be confident that Jill knows the necessary steps that need to be taken to ensure that you get a home loan. She is familiar with lenders in the Greensboro, NC area who will fund mortgages for bad credit. Call Mortgages By Jill at 336-740-9068 today or fill out our online contact form to schedule an appointment.