We see many credit reports with low credit scores (anything less than 620), and often many scores in the 500's. This is BAD credit. If you are one of the folks affected by this terrible economy, you have a low credit score and you have a dream of buying a home, here's some simple advice for you.
It is unlikely you could be approved for mortgage financing with that credit score at this time.
Beware of any mortgage professionals promising you an approval with such a low score. Wait on buying a home. I recommend you take the time to resolve your credit issues.
First, settle any outstanding debt. If you owe money on collection accounts, charge-offs and/or judgments, make payment arrangements and get these accounts paid promptly.
Next, begin rebuilding your credit. If you have current accounts with good payment histories, or even some previous late-payment-blemishes, make sure you continue to pay those accounts on time. If you do not have any existing credit accounts then you'll need to establish several in order to create a viable credit history.
I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You'll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website.
Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE.
The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.
The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.
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There is not a black and white answer. It depends
The basic things it depends on are:
-Purpose of loan: Purchase, Rate/Term Refinance, or Cash Out Refinance
-Type of home: Primary Residence, 2nd/Vacation Home, or Investment Property
-Number of units
The minimum allowable in any instance is a 620, although you may need a higher credit score depending on the variables listed above. For example, if you are only putting 5% down or if your debt-to-income ratios are high (over 36%) then you may need higher credit scores to qualify.
Your best bet is to speak with a lender well in advance of purchasing a home so we can go over your situation and lay out the best options for you, and also to troubleshoot and put together a gameplan to put you in the best shape possible to get a low rate and qualify for a home loan.
Hope this helps! Call me or email me if I can be of assistance to you.
Loan Officer -NMLS #977416
WCS Lending, LLC
Toll Free: 866.936.5363 ext. 278
(214) 763-4629 cell/text/nights/weekends(Really!!)
Lending all across the entire Great State of Texas!!
Search Dallas area MLS for FREE. No registration => http://www.ntreisinnovia.net/cgi-ntr/BR_login?0501134
Kay Kirby, Realtor
9514 Console Dr. Suite 103
San Antonio, TX 78229
Phone: (210) 377-0300
Fax: (210) 377-0018
Tony did a wonderful job of breaking it down! If you're looking for someone local to speak to, I can help you identify someone through my network of professionals. As Tony alluded to, this is an important step to take prior to starting your house hunt. While all Realtors vary, like most I typically require that my clients obtain pre-approval/qualification before viewing any properties. It sounds like you're on the right track!
Best of luck, and let me know if I can be of any assitance when ready to find a home!
Liz Petroff, REALTORÂ®
Texas Premier Realty
Hope this helps.
Don Groff | REALTORÂ® & Mortgage Broker
Austin Real Estate Pros & 360 Lending Group
o 512.669.5599 | m 512.633.4157 | firstname.lastname@example.org
websites: http://www.AustinListed.com | http://www.360LendingGroup.com
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