How To Get A Home Loan With Low or Bad Credit
So, you have bad credit. It’s not the end of the world. It still may be possible for lenders to give you a loan, provided your credit score is not too low. Believe it or not, you can still get a loan with a low or bad credit. Just remember that you may pay a higher interest rate and more fees due to the lower credit score. Here are some ways you can do that:
Get FHA Loans
As a general rule of thumb, your credit score needs to have at least a 620 -640 to get a loan. You can still get one if your score is less than perfect if you opt for FHA Mortgage. In 1934 the Federal Housing Administration created these loads to increase property ownership America.
It works like this – FHA loans will require mortgage insurance premiums (MIPs) which protects the lender. They really want to lend you money but can’t if it means compromising their interests. A FHA Mortgage can help them do that without incurring the risks.
The best thing about this is that you can pay for your home in intervals spanning 15 or 30 years. You can choose between fixed and an adjustable rate mortgage according to your budget.
Check your score again
Your credit score may not be as bad as you think. Missing a couple of payments does not mean your credit score is all that bad. Even if you have an old debt to settle, you can still apply for a home loan easily.
Of course, there are some late payments that will weigh heavily on the score. So, if you owe money for some dental work or a doctor’s appointment, you’re set. Check your credit score online beforehand just to make absolutely certain. If you are late in taking care of a housing payment, then you have something to worry about.
The bottom line is even if you do get a loan on bad credit, you cannot delay payments. You can improve your credit score by making a couple of pending payments in succession. You can also do the same by refinancing a loan.