Too many of us, we hope to own homes and raise our families in it. However, our Credit Scores determine whether or not we are eligible for a mortgage through the conventional and regulated lenders. So, do you have Bad credit?
If yes, though your options won’t be similar to that of one who has good credit, you can still realize your dream of owning a home. To get the best mortgage you will need to practice discipline and plan. The following is what you need to know:
• Patience Pays
You’ve had a tough break that caused you to go bankrupt or have a consumer proposal. Now, once your case is discharged, the mainstream lenders won’t consider you, until, after a minimum of two years. It is the time to rebuild your credit.
Work on getting your credit score up and improving your finances. Find yourself stable employment and getting income that is provable. If your employment history is unstable, then to the lender, you become a risky investment.
A prime lender will approve you for a mortgage if you have a steady income and proper credit. The same applies to commission workers and those who are self-employed.
• Look Into Alternative Lenders
Maybe you feel the two years is too long a period to wait. What next? Some specific lenders deal with borrowers who have bad credit. With the conventional lender, you would have had to put a down payment of 5%, but the rules don’t apply to the uninsured and private lenders.
You can consider borrowing from a trust company if your credit score is high but not doesn’t meet the threshold. With a private lender, you may have to make a down payment of at least 20%.
• Bigger Down Payment
You do not meet the requirements of the A-lenders. Saving for a more significant down payment not only improves your finances but also helps you qualify for a subprime lender. It shows the potential lenders that you are less of a financial risk.
With a more significant down payment, you reduce the mortgage payment period, or you can amortize this high-risk mortgage over an extended period by making smaller payments.
• Rebuild Your Credit Score
Take charge of your credit score and rebuild it. Purpose to pay your bills in full, and in time. Try and meet the minimum monthly payments you make on your credit card statement. Don’t spend more than 60% of the given limit. Use a secured credit card if you don’t qualify for an unsecured one.
When choosing a secured credit card provider, it is ideal to go for one who after proving your creditworthiness, gives your deposit back to you.
So, yes you can qualify for a mortgage even if you have bad credit. But you will still need to work on your credit score. It will open doors to saving thousands of interest.
