How You Can Get a Home Loan with a Low Credit Score
If you’re looking for a loan to buy a home, you know that a major hurdle to clear involves your credit score. Having good credit can open up opportunities for desirable property and help you find the home you’re looking for. But a bad credit score can make it difficult to buy a home. Sometimes extremely difficult.
Cliffco Mortgage Bankers Helps Customers with All Kinds of Credit
But difficult doesn’t mean that it’s necessarily impossible to find a home loan. At Cliffco Mortgage Bankers, we encounter customers with all levels of credit. We’re committed to helping people achieve the dream of home ownership. We know that there are ways to improve credit scores and loans available to those who don’t have the strongest credit score. We want to let you know about the options available for those who have bad credit to determine if you’re ready to take on a home loan.
What to Know About Your Credit Score
Your credit score has a large effect on how much financing you’re able to obtain. According to an article on the Fox Business News website, some lenders might offer a conventional mortgage to a borrower who has a credit score as low as 620 with the possibility of some lenders even going lower.
But if your credit score still isn’t at the level where you can attract the financing you need, there are steps you can take to improve a bad credit score. According to Zillow, if you start to pay down your debts and make certain your bills are paid on time, you can start to improve your credit score. Also, get your credit report and check it carefully. Challenging errors on the report can also improve your credit score.
There are also things you should avoid because they can hurt your credit score. You shouldn’t open too many new credit accounts in a short period of time. Nor should you try to close an account in attempt to improve your credit score.
Loans that Benefit Those with Bad Credit
If you can’t find a conventional mortgage with your credit score, there are loans available that can still make home ownership possible. A very popular option is a Federal Housing Administration (FHA) loan.
FHA loans tend to require lower down payments, as low as 3.5 percent, according to NerdWallet, lower closing costs and lower credit scores, usually at least 580. You can use an FHA loan to finance a new or existing 1 to 4 family home. You’re allowed to have a family member, employer, or charity contribute to the down payment.
You will be required to carry mortgage insurance which will mean paying an upfront premium at the time you close the loan. You’ll also be responsible for an annual premium that’s included in your monthly payment.
Cliffco Mortgage Bankers Can Lay Out All Your Options
A bad credit score doesn’t necessarily mean that you can’t purchase your property. There are ways to improve your credit score and there are options if you can’t find a conventional mortgage. Cliffco Mortgage Bankers can lay out your options. If you’re looking for a home and are concerned about your credit, contact us today.