What to Do If Your Mortgage is Too Low to Obtain a Mortgage

You may have been hearing “no” quite a lot of times applying for a mortgage with bad credit. You want to buy a home, but obviously the lenders you’ve trying hard to succeed aren’t giving you the green signal. However tough the undertaking might appear to you at the moment, did you know you aren’t exactly out of luck yet?

Yes, you read right; there’s no outright rejection for people with bad credit. Home Mortgages, in other words, are very much a real possibility.

Evaluating the Credit Score

The first step is to see how low your report stands. FICO scores range from 300-850, with the average falling around 700. So, the question is, is yours a 400 or is it a 600 perhaps? The chances of your approval depend on the exact figure of your score: the lower you are in the range, the more risky your prospects for a mortgage become. On the other hand, you don’t need a perfect score either.

Now that you don’t have a score of at least 620 besides a year or more of timely payment history for all the bills and a Debt-to-Income ratio of less than 43%, you may not be eligible for the conventional loan program. But, there alternatives you can consider too.

The Options

Before you begin shopping elsewhere, you should be mentally and financially ready to put in a larger down payment. It’s one way you can reassure lender of your commitment and so get your mortgage.

1.      The Federal Housing Authority Loan

It’s one of the options which, insured by the government agency, makes lender revise their guidelines to make them more favorable for individuals with less than perfect credit. The agency isn’t making the loan; it’s simply backing it so that if the person, who doesn’t appear worthy risk as depicted by the report, defaults on this loan too, the fact that the FHA would pay the amount back to the FHA-approved lenders makes them consider approving the applicant. A minimum of 580 FICO score is typically required for a 3.5% down payment. A score that lies between 500 and 580, the down payment increases to 10%.

2.      The US Department of Veteran Affairs and the US Department of Agriculture Loans

The VA program is to aid the veterans and surviving spouses to buy a home of their choice. Again, it doesn’t loan money, but simply provides a guarantee to the lenders on the loan amount equivalent to 25% of the approved loan for the maximum allowed that year. You need a minimum of 620 for this mortgage.

The other one is designed for the individuals living in the rural parts of the country and earning moderate income. If the conditions are applicable to you, you can qualify for the loan.

Meanwhile, Raise the Score

You checked out the report prior to applying for a mortgage product to see if you are a suitable candidate. The earlier you got wind of a bad credit score, the more time you would have to fix mistakes and take steps to build it and save for the down payment at the same time.

For more information visit website http://www.fhaloansearch.com/