You have a credit rating below 620, and you think you cannot get a mortgage. At that credit rating, or even below, you may still be able to get a mortgage. However, you may have to consider few things.
When you apply for a mortgage, you might want to expect these things as listed by Realtor.
1. The limited Options
The Federal Housing Administration is the only program for those with credit rating of 620. However, you can still apply at Fannie Mae and Freddie Mac which offer conventional loan financing for those people with credit rating requirement of 620. You will need a minimum score of 600 to buy a home or get a mortgage.
2. There are rigorous income requirements
The lower the credit score, the lender will have to take in bigger risk just by approving your loan. This is why they may ask for consumers to have a 43% debt-to-income ratio. Meaning, your debt versus your income cannot be more than 43%.
3. A complete homeownership counseling may be asked
Those with bad credit may be asked to have proper and complete counseling for their application to be approved. This can be easily completed online, as well.
4. Higher rates and pricing awaits you
Your bad credit will definitely affect the rates of interests and fees. Lenders will charge in accordance with the risk they are taking.
Always keep in mind that buying a home and making on-time payments on your mortgage will make your credit rating rise. If you have a good credit standing, would help you qualify for refinancing which will lower the interest rate and more affordable payments.
It is best to always check on your credit rating and making sure that you do your payments on-time to avoid risks of getting a bad credit score.
Do you have a bad credit and are you planning on applying for a mortgage?
