Bad Credit Mortgages
Bad credit mortgages are always a bad idea…except when they’re not.
“What?”, you say. You, a nationally published credit repair coach, uttering such heresy. How can it ever make sense to apply for bad credit mortgages with a bad credit score? This application will cost your credit score an inquiry and put you at risk of being refused bad credit mortgages outright. You will be charged outrageous interest even if you are accepted.
Consider the following facts. It is possible that there are times when it makes sense to put the cart before the horse. You might consider buying the perfect house at the high rate your miserable credit score justifies as you work on a better credit score. You can always refinance the bad credit mortgages a year or 2 down the road when your credit score has improved.
The Perfect House Scenario
What if you find just the house you are looking for in just the neighborhood your family likes near work and school? What if that deal is so good that surely someone else will snap it up if you don’t move on it right now?
Maybe the deadline for your children’s school registration is fast approaching. Maybe the school district where the desired house is located has a fine reputation and your children’s friends are going there. Maybe the perfect house is up for or going up for auction soon because the sellers need a quick sale to settle an estate or divorce problem or even job relocation. Maybe you, the potential buyer, are up for a promotion or a big raise or an inheritance is on the horizon.
Bad Credit Mortgages Sellers are Hungry
The mortgage comfort zone FICO credit score for standard 30 year mortgages is around 720 nationally. With a decent down payment, reliable income and good debt to income ratio you will get a good interest rate. Not the lowest interest rate. The very best interest rates are reserved for those with 750-760 FICO scores accompanied by an attractive all around profile. Attractive profiles include profiles with high earnings to debt ratios in stable industries. A long track record on the same job or a job in a similar industry is a huge plus.
“I know that” you say. You are working on fixing your credit but this deal simply can’t wait. In your mind you have an emergency. You really want this particular house. You want to take your chances. You have to try and squeak by the application process because you must buy now or risk losing out.
You will continue to work on refinancing after the sale. With your eyes wide open you need to look into bad credit mortgages and you want to do it now.
In any scenario increasing your down payment will cover a lot of sins.
Bad Credit Mortgages Realistic FICO Scores
- Conventional 30 Year Mortgage: FICO of 680 or better. Some lenders will work with you with a FICO as low as 620 if you bring in more for a down payment and are otherwise a good risk. Conventional loans have stricter requirements than government backed loans.
- FHA Mortgage: 580 minimum with 3.5% down. Lower credit scores are not barred just more expensive. Some lenders will go as low as FICO 500 with 10% down.
- VA Mortgage: The VA itself doesn’t set the limit on the FICO requirements but the VA partner banks that make these loans require a 620 FICO score.
- USDA: USDA loans will be made with a 640 FICO score by some lenders. Some will go a little lower with additional paperwork, references and letters explaining any negative entries on your credit report.
Shopping for Bad Credit Mortgages
Bad credit mortgages lenders for those with imperfect credit can be found on line, at your local credit union or through bad credit mortgages sellers that specialize in marginal cases. If you enjoy a good relationship with your personal bank or credit union sit down with a manager. Explain your situation candidly without running a credit check. If they are simply not interested you can continue your search for bad credit mortgages on the internet.
Shopping on the internet has some advantages. If the lender has a pre-qualification tool you can size up your chances to be accepted initially with no hit in the form of a hard inquiry to your credit score. Some lenders may even use or factor in alternative data like bank statements in addition to the traditional credit score to assess your worthiness. Lenders such as Lending Tree will present you with as many as 5 aggregate multiple offers.
Internet has Many Bad Credit Mortgages
Peer-to-peer lenders such as www.Lendingtree.com and www.Prosper.com work on your case very efficiently and fairly. Some other lenders you might like to try include New American Funding, Carrington, Trijano, J.G. Wentworth and CitiMortgage. There are more.
Remember that a series of mortgage inquiries within a 30 day period are regarded as one inquiry for credit scoring purposes.
If you have some military service in your background the military credit union you are eligible for will roll out the red carpet to accommodate you.