How To Get A Mortgage If You Have Poor Credit
When we make mistakes in our past, we can usually learn from them and move on. That isn't easily the case when it comes to finances. Maxing out on credit cards, defaulting on loans, and other monetary errors can follow us around. Thankfully, getting a mortgage with poor credit is attainable. Here are some tips to get a mortgage loan with low credit.
Build Up Your Emergency Savings
Building up a savings reserve for a rainy day, and proving to your lender that you have something in case of an emergency crops up, is always a good idea. Usually, the reason a person defaults on a loan isn't because they have a lot of money in their bank accounts, it typically happens when someone falls on hard times, and they don't have emergency savings to balance out those hard times. Showing that you have a full contingency plan for such times will make you a much more desirable borrower and may allow you to get a better price than someone who has no savings at all.
Offer A Bigger Down Payment
Saving up for a more significant down payment than what is required is another way to get your lender's attention. Showing a lender that you have extra money to put down on the home loan, and thus borrowing less money from them, will sweeten the deal for them and produce an even more competitive mortgage option.
Look For Bad Credit Mortgage Solution Loans
There are several options for people who have poor credit but still have a dream of being a homeowner. FHA home loans, for example, allow you to have a lower credit score than conventional home loans require. Depending on your credit score, you may only need a 3.5% down payment for your home loan as well.
Check Your Credit Report and Start Now to Rebuild Your Credit
Always look at your credit report before you go to a lending agency. Check for things on the report that hurt your credit. Some lesser missed payments won't hurt your credit as much as missing a car loan payment or a mortgage payment. See what is causing your credit to be so low. Some things may be obvious to you, but other items may not have been as easy to identify. Look for ways now to start rebuilding your credit so when you do talk to a lender you could show them how you are already implementing a strategy to improve your FICO score and rebuild your credit. Look through your credit report to see if there are any mistakes and get them corrected. Call your credit card companies and see if you can get a higher credit limit. Pay down staggering debts. Diversify your debt portfolio by having more than just one type of debt.
Don't Give Up
If you are having a hard time finding a mortgage loan now with your poor credit, consider taking some extra time to rebuild your credit first. Continue implementing the ways to improve your FICO score and stick with it. Taking these steps now will not only improve your score but continue giving you a better chance for tomorrow.