Without them, even if you find a lender that will work with you, you will pay more to obtain a mortgage than if you can get your score a little higher.
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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If you would like to discuss this in a more private forum you can send a direct message here on Trulia or to firstname.lastname@example.org
Sub-prime mortgage loan defaults were a contributing cause, possibly the leading cause, of the global financial crisis of 2008,
It will no longer be called sub-prime. The new name is High Risk Consumer Lending. What that means is you will pay a higher rate than someone with good credit because it is perceived that your awful credit score means that, considering your recent credit history, you are more likely to not pay your mortgage loan.
Because the investors that fund these loans expect some losses, they demand higher rates of return to compensate them for their extra risk.
My advice is don't do it. Don't buy. Rent. Get your finances in order over the next few years so that you can get the benchmark rate.
I would definitely speak with a lender so they can actually get you on the right track to get pre-qualified for a loan. I have a lender who is able to look at your credit and help you bring it up. If you need a referral let me know. Also if you aren't already working with an agent and are looking for one, I do specialize in the 95826 area and would be glad to help in anyway I can.
Lyon Real Estate
Another suggestion you may want to look into is a credit union or portfolio lender where they essentially make their own credit guidelines.
Otherwise, I would get a few credit cards with low limits and just use them for everyday needs and pay them off at the end of each month. Doing this over time will help you build credit and increase your scores.
Hope this helps!
You may qualify to buy FHA with fico scores between 500-579 with 10% down or minimum 580 fico score may qualify FHA 3.5% down or as low as .5% half percent down payment program. You may consider 3% down conventional from a minimum 620 fico score.
You will need to be pre-approved if you decide to buy to be able to meet an agent to view and submit offers on any homes of your choice. Your qualifications will be determined by your credit profile, debt to income ratios, fico scores, home price, loan program and how much you want to invest into the down payment and closing costs.
If you figure out what cities/zip codes you are considering, minimum number of bedrooms and the maximum payment/price you are looking to achieve you can be emailed listings to fit your search criteria. Your email address is needed to set you up for the automatic daily updates.
You may qualify to buy with minimum out of pocket expenses and pay less than rent in many cities. It only takes a few dozen questions to qualify, go over your options and email you listings to study and compare. Here are some links to study as well as web reference links to many loan program pages offered...
Sheryl Arndt, Real Estate Broker - Sr. Loan Officer CA only
Veteran & VA/CalVet Loan Specialist
REO & Short Sale Specialist
Credit Repair At No Cost
ALL Loan Programs Available
22+ Years Experience
9am till 5pm by phone Monday thru Saturday, Sundays by appt., EMAIL ANYTIME 24/7
Under640FicoScoreLoans@gmail.com or HomeLoans4U@live.com
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But it looks like you are trying to find an alternative manner to establish your credit without going through a traditional banking institution. The best alternative is to start with a credit card from a local credit union to build your credit history over a two year period. Home lenders want you to have at least two lines of credit history, so as your second line of credit you could use one of the following to qualify: a car loan through a credit union in good standing, a cell phone contract in good standing, a contract gym membership in good standing, a history of good standing with your utility service provider, or a contract cable/internet service in good standing.
Keep in mind that you also need to be a recent college graduate and working in your field of study or you need to have a 2 years of work history working in the same industry over the two years. You can switch jobs as long as you remain in the same industry, and don't have large gaps in work history.
Senior Loan Officer
1 Easton Oval Suite 400
Columbus, OH 43219
614.324.4700 Ext 1561
Company NMLS ID: 1652