Everyone wants to buy their own house someday especially for those starting off a new family. Unless you’re filthy rich, you really don’t have much of an option but to get mortgage loans. If you plan on getting one, you might want to check your credit score first. As banks will be thrilled to offer you mortgage loans, having a bad credit score will certainly take away your enthusiasm. A bad credit score will not make you trustworthy enough to repay them of the money you borrowed.
Your Credit Score
Lenders can evaluate your credit result in two ways. They can rate you with letters. A as best credit and so on and so forth. You also get scores that may range from 400-800; 800 being the best and 400 as near to worst. These scores carry the corresponding credit reporting agency that did the credit evaluation. FICO, Beacon and Empirica are some. The mathematical formulas used by these evaluators are not disclosed. You can have your credit checked online for free here. When you have received your credit report, review them as well for any erroneous findings so that it will be resolved promptly. It might turn out you need not worry about your credit after all.
Look for a good real estate deal
Explore what is out there. Don’t settle easily. Find a good real estate agent from family members, friends or co-workers. Getting a great deal will help you out with your finances. This will help you out in gauging your mortgage loan scheme.
Government Mortgage Loans
The FHA and VA don’t actually provide the mortgages – they guarantee mortgages that meet that have met their standards and that are issued by qualified lenders. It is entirely up to the lenders themselves to decide what credit scores they’ll accept, and at what terms.
FHA
These loans as are given by the Federal Housing Department together with the HUD. These loans are targeted at people from low and middle-income families who find it difficult to qualify for the traditional mortgages. People with bad credit are still able to get mortgage loans as FHA Home loans do not currently require a FICO score. The interest rates are much lower compared to ordinary montages. It also requires only less than 5% for the down payment. Here are some of basic FHA loan qualification guidelines.
- Steady employment for 2 years, preferably with the same employer
- An almost fixed or increasing income for 2 years
- Credit report should usually have less than two thirty day lates in last two years with a minimum credit score of 620 or higher or in some cases no credit score at all.
- Bankruptcies must be at least two years old, with perfect credit since discharge.
- Foreclosures must be at least three years old, with perfect credit since.
- Your new mortgage payment should be approximately 30% of your gross (before taxes) income.
If majority of these qualifications apply to you, you are on your way to approval.
VA Mortgage Loans
As the name implies, this loan was conceptualized to provide housing and assistance for veterans and their families with no down payment and with flexible considerations on their credit standing. The lack of an established credit history is not a hindrance to loan approval. As given in the credit standards, a satisfactory payment history for 12 months on items such as rent, utilities, phone bills, etc., may be instead be used to establish a satisfactory credit history. Being in Consumer Credit Counseling Plan can also help get the approval so as long as the counseling agency approves it. Prior to getting the VA loan, you need to supply the following:
1. Social Security numbers
2. Residence addresses for the past two years
3. Names and addresses of your employers over past two years
4. Your current gross monthly salary
5. Names, addresses, account numbers and balances on all checking and savings accounts
6. Names, addresses, account numbers, balances and monthly payments on all open loans
7. Addresses and loan information of other real estate owned
8. Estimated value of furniture and personal property
9. Certificate of Eligibility and DD214, (for veterans only)
10. W2′s for the past two years and current check stubs
11. For self-employed individuals, you will need to provide personal tax returns for the past two years, current income statement and balance sheet for the business
Cosigners
Cosigners are people who alongside with you take legal liability in paying your loan. You can get any person with a great credit score to help you out. This will get you better mortgage loan offers with lower interest rates.
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