Part of the American Dream is buying your own home, but for many this dream is unattainable due to their current credit scores. While it may make the process more challenging, a bad credit score doesn’t automatically disqualify you for commercial mortgages. For those who are repairing their credit there may still be ways to work towards home ownership.
Take Steps to Increase Your Credit Score
Although it can vary, acquiring a mortgage loan will require a minimum credit score of 680. If you are applying for FHA home loans, the credit score requirement is slightly lower at 620. Regardless of which loans you are applying for it may benefit you to take a good look at your credit history. Inspecting your credit report for errors as well as paying outstanding bills can help you to increase your credit score. There are several credit monitoring services available which allow consumers to see how paying down certain balances can effect their credit.
A Higher Down Payment or a Cosigner can Increase Your Chances
If you are able to find a cosigner, it could significantly help to increase your chances of securing a mortgage. This will mean that your cosigner will be signed on as a borrower as well, including all the liability. If you have the ability to pay a larger down payment, it can be to your benefit when trying to get a loan approved. Even with lenders with lower credit score, banks are mostly concerned with the lenders ability to make their payments on time, offering a larger down payment can demonstrate your credit worthiness. A larger down payment can also possibly mean lower home mortgage rates and lower monthly payments.
Finding Direct Mortgage Lenders
Regardless of your credit it is important to research direct mortgage lenders. The best mortgage lenders will be able to work with you to compare mortgages, ensuring the best rate for your situation. A good place to start your search is by word of mouth, ask friends about their home buying experiences, which lenders were patient and accommodating, which lenders were too pushy or dismissive. Also look online for consumer reports, try to narrow down a lender that has experience in helping other home buyers in your current financial situation. Take your time and use your common sense when making your decision, buying a home is not a trivial matter and you should never feel pressured to take an inferior mortgage rate.
