How to get a Mortgage While having poor or Bad Credit

It can seem hopeless for people who have bad credit to purchase a house in today’s market. 21 per cent of people living in America have a credit score that is below 600, and this is considered subprime according to credit bureau Experian. The average credit score is 675 and is still too low for a person to qualify for the best conventional mortgage rates. The good news for people who have average and even low credit score is that it is still possible to purchase a property. Government programs such as FHA and VA loans together with lenders such as Carrington and Quicken Loans that specialize in lower credit are now making it possible for people with low credit score to access home loans. By the fact that you have a low credit score does not mean that you can’t buy a home. This is because there are a lot of options out there for people low FICO scores to choose from when purchasing a property. This is because bad Credit remortgages are more common nowadays than most people would imagine. In this article, we talk about how to get a mortgage while still having poor or bad credit.

Balance your Credit Problems with Cash

Some of the things that lenders consider before they decide to approve your mortgage application include credit score, debt-to-income ratio and Loan- to – Value ratio, or LTV. A more substantial down payment is capable of making you look attractive to lenders. This is because you will need to borrow less money from the lenders for the purchase and you will need to have more equity in the home. You may decide to turn to your friends or relatives for down payment money; this is acceptable by the Lenders however they may require a letter from the person who helped you with the down payment cash stating that it’s a gift. If your friend or relative gives you a cash gift, then it’s essential to deposit that money in your bank account as soonest possible. Because the lender is interested in knowing where that money came from, make sure the money they give you seasons in a bank account for at least 60 days.

Begin Paying on Time

You can get a bad credit remortgage when you begin to pay your credit on time. A low score in most cases is usually a result of a person’s payment habits. An individual’s payment history has a significant effect on the person’s credit score. Experts in the remortgage business have indicated that a person’s payment history makes up 30 per cent of the total credit score. Therefore, if you are the kind of person that does not pay his or her debts on time, it is high time you begin to do so. Practicing this habit of paying debts on time can tremendously improve your credit score.

Keeping Balances Low

How much a person owes makes up around 30 per cent of the FICO score. This means that the less you owe in comparison with whatever you could borrow then the higher the score. To be in a position to receive a loan, make sure you pay your balances off before the closing date of your credit card statement.

 

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