Loans

Home Buying with a So-So Credit Score

0 90

Don’t have a great credit score but you want to buy a house? There is still hope for those with blemished credit reports. According to one mortgage broker al potential home buyers should look for FHA loans.

The Leniency of FHA Mortgages

FHA mortgages have multiple advantages. The down payment can be as low as 3.5% of the price of the property and buyers do not have to have a perfect credit score. You can have a blemished report and 580 is the eligibility standard.

Another great benefit of this loan is that the funds for the down payment can be donated by a relative. Loan underwriters typically want to know where down payments came from, but FHA mortgages are pretty lenient, so if you receive funds from a relative, all that is needed is a letter documenting where the funds came from.

The Federal Housing Administration previously required a minimum score of 620, however, today they will accept scores as low as 580. Even with a low score, it’s important to have a healthy down payment and low debt. This will show the loan officer that you have the ability to pay back the loan.

Improving Your Credit

Paying your bills on time helps your credit a lot. Being late on your monthly accounts is one of the biggest factors to ruin your credit. But also keeping your balance to a certain limit authorized by lenders affects your credit score. To maintain a good credit score you should keep your balance less than 35% of the authorized limit and pay your balance on time each month. One of the most important ways of boosting your credit score is checking for inaccuracies, then disputing them with the credit bureaus. If they verify that anything on your report is incorrect, it will be updated or even deleted, which can increase your score.

Calculating Credit Score for Mortgages

Your credit rating, also called FICO SCORE, is calculated taking into account the following factors: credit history, debt ratio – available credit or percentage of debt you have incurred, your payment history, the number of credit applications or inquiries on your report, and types of debts you have. The five components that mortgage underwriters are looking for, which make up your score is broken down like this: Payment history: 35%, Amounts owed: 30%, Age of your credit history: 15%, Amount of types of credit in use: 10%, and Account inquiries: 10%.

This is how the underwrites will access your risk level for repaying a mortgage loan. They are looking to see how you have handled your past responsibilities, and this will help them to make their final decision. Of course, this is only a snapshot of what they consider. Loan underwriters will also look at the amount of your down payment, as well as how much savings you have in your bank account. All of this provides an overview of your reliability. While it’s important to review your credit report, and keep a good score, blemishes don’t always tell the complete story, so it’s important to meet with a mortgage broker and get a clear picture of how to get you into a home.

About the author / 

Robert B. Wilfong

Leave a reply

Your email address will not be published. Required fields are marked *

+ twenty five = thirty four

POPULAR The most recent

  • Tips to Finding a Good Forex Broker

    One of the first things you need to address in Forex trading is what sort of money management rules you will employ. Forex trading is a risky business at the best of times. For this reason it is important to do everything possible to protect your investments and get qualified advice. One way of doing…

  • Digismart Credit Card: Features, Eligibility & Documents Required

    When cash transaction was hampering the lives of the people, credit cards helped them to the rescue. Now, the credit cards are provided with an all-new feature which helps people experience another level of convenience. With the launch of Digismart Credit Card, people can now shop, travel, dine, etc. with one single card. One can…

  • How Crawfort helps customers to fulfill their needs?

    Many people are there who all are very much interested in going for different things. But to get those, you need the money, and it is not an easy job to earn and spend money always. Singapore is a place where almost everything is expensive, and for that, it comes among the most expensive cities…

POST TAGS

LATEST COMMENTS

    Find Us on Flickr

      GET IN TOUCH

      Mortgage Advisor Help is article directory operate by Peter a blogger and the content writer. Have a flair for writing Advertising, Blogs for Business, Mortgage, Loans, Fame, Marketing, articles and want to have it read by readers who share the same passion and interests. Feel Free to contact for any Question using our Contact Form.

      Stay up-to date with the latest news and other stuffs, Sign Up today!