You might not believe us if we say, that your credit score might not the important factor to get a mortgage. Yes, of course the credit scores if the key information lenders use to determine whether you have a good or a bad credit. However, many of the mortgage lenders extend mortgage loans to applicants with the least credit score of 640.
Having bad credit can cost you big loss when you finance or refinance real estate. But if you want to pay less, then here are some ways you can follow in order to get a mortgage loan with bad credit.
Check for various lenders
There is variety of lenders in the market, some offers better financing terms. You can shop around and find the suitable lender with which you can save thousands by locking in a lower rate or by paying less in fees.
Build your credit if needed
If your credit score is less than 620, then you may want to build it up before you start your mortgage process. You can simply improve you credit score repute by disputing the errors in it, or by paying down high credit card balances.
Search for all types of bad credits loans available
You can look for the loans which are widely used by the first time or entry level buyers such as FHA mortgages, USDA mortgages or any other.
Seek a help from friend or a family member by finding a co-signer
In case your credit score is low, you can always consider seeking a help from a friend or a family member. The co-signer is also responsible for the repayment of the entire debt, it will not be a burden as a whole to you if you find a co-signer.
Try saving money for a larger down payment
Lenders like to go through with a combination of bad credit and no money down which can risk the factor in isolation. They wish to see minimum of 20% down payment.
Lower your debt usage
It is very important to lower your debt usage when you have bad credit. It is a way through which the lender calculated how much you can afford. So it is always advisable to lower you debt to income ratio while getting a mortgage.
You can use rental history
You can always use your rental history in order to prove you credit good. Although, most credit reports don’t contain information regarding the past rental payments but still it can help you with proving your good credit score. You can also choose any tool, but before choosing any tool you must do your research part about how protected your personal data will be and what procedures you need to follow if you want to cancel it.
Explain your credit history minutely
You must break down your negative items that can affect your credit score and can give reasons to your lender to not have faith in you. You can provide any proof that you are taking care of the situation which is not in favor right now but soon you will be receiving benefits of the unexpected loss.