What is a good way to get a mortgage loan for a first time home buyer with bad credit?
Saturday, May 8th, 2010 at
2:07 am
I have paid off all delinquent things on my credit report and all I have on there is my carnote and my student loan which are both in good standing. I still have a low credit score which is what is damaging me right now. Any suggestions of lenders or companies that can assist me with purchasing a home?
Tagged with: credit report • credit score • lenders • student loan
Filed under: First Time Home Mortgage
There may be financing for you but a lot will depend on just how low your credit score is and how much money you have to put down.
Mortgage lending decisions are based upon "perceived risk". Most lenders use an automated underwriting system developed by either FNMA (Fannie Mae) or FHLMC (Freddie mac). These systems are score driven and make it difficult to get approval on a low down payment loan with low credit scores.
If your score is below 600, you may need to use a sub-prime lender. Traditionally, their rates are much higher and may have pre-payment penalties on the loans which tie you to that loan for a 2 – 3 year period.
Congratulations for taking the first step and paying off all of the delinquent loans. You are on the road to good credit again. Each month your credit score will improve now as long as you keep making your payments on time.
My best recommendation to you is to start putting away as much money a month as possible. The more money you can put down as a down payment, the more favorable loan you will qualify for. If you can delay your purchase for a year, you may well be able to qualify for "A" level financing. A year isn’t a long time and now you have a goal to work towards.
Good luck.