Many individuals stress over their credit score before buying a home. Though buying a home does require that you have fairly good credit, it's actually not a requirement. Not only should everyone be able to purchase a home of their own, but mortgage lenders know that they can repossess the house if necessary and that a home can appreciate in value. Thus, it isn't as great a risk to them as a personal loan or line of credit.
What is Considered Bad Credit?
Your credit score falls between 350 to 800. 800 is considered to be a perfect credit score. Anything above 720 is generally considered to be good credit, while anything above 760 or so will be considered to be very good. The better your credit is, the more likely you are to get a low interest rate on your mortgage loan.
If you have a credit score under 680, it's going to be harder for you to get a mortgage. If you have a credit score under 620, it can feel nearly impossible. You may need to improve your credit score.
However, improving your credit score can take some time. If you want to buy a home immediately or if you feel that your credit score is going to be difficult to improve, you may need to explore some alternative options.
What Are Your Bad Credit Mortgage Options?
FHA loans, USDA loans, and Fannie Mae loans are among the types of loan that have very low credit qualifications. VA loans don't even have a credit standard; they will look at the entirety of your financial picture before they render a verdict.
Conventional loans will usually require a credit score of 680 or more, but this actually isn't a difficult credit score to achieve. With some work, most people can achieve a "fair" credit rating; you just need to make sure to pay down your credit lines and avoid any collection activities.
There are also hard money loans available, from investors who are individually giving loans out based on the equity of the property rather than your current financial status and credit score.
If you're interested in a bad credit loan, you should consult with local lenders such as Carrington Wholesale. Try to look for a lender that deals with wholesale mortgages that are specifically for those with bad credit; you may have to pay more for interest, but you can get a home.Share
24 July 2018
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