How To Secure A Mortgage Even With A Bad Or Poor Credit

Poor Credit

Are you hoping to buy a house this year, but fears of getting rejected for a mortgage? Don’t lose hope! You can still make that dream home purchase you’ve always wanted – despite that low FICO score or bad credit of yours.

One of your American Dream may seem out of reach due to your current credit health. Thankfully, you can still do something to get your mortgage application approved by a lender. With the help of a Mortgage Broker Grand Prairie, you can find a mortgage type that will best fit your needs and situation.

The following are some of the steps you can take for you to secure a mortgage this 2019 despite having poor and bad credit.

Use Cash And Pay For A Higher Down Payment.

Your credit score, Loan-To-Value Ratio as well as your Debt-To-Income Ratio are the top three things a lender will check when approving your mortgage application. If you pay a higher down payment, this can cause the LTV or your Loan-To-Value Ratio to improve. Another way to put a higher down payment would be by asking for help from family and friends. Deposit the cash into your bank account and let at least 60 days to pass by before applying for the home loan. You will need to tell your lender that you received the down payment as a gift through a letter, which they will verify.

Good Read: The Rules for Documenting Mortgage Down Payment Gifts

Let Your Mortgage Broker Help You Understand Your Credit Options.

Working with mortgage brokers has its perks. For one, they won’t only find excellent mortgage deals that work for you and your budget. They can also guide you to understand your credit while helping you find options that will fit your situation. They can help you have a better idea of how much you can afford while checking your assets, your cash flow, and repayment history. You get to understand your financial status, learn about the different options available and see which one is applicable for your situation.

Review Your Credit Report For Errors

According to a report made by CNBC, 1 in 5 consumers has incorrect credit reports leading lenders to think they are riskier than they really are. When you have a bad credit under your name, you may still get a mortgage, but you can expect less favorable terms and higher rates including interest fees. So, before applying for a mortgage, make sure to check for any errors and discrepancy. Consumers are allowed to review credit reports. Take advantage of this to get better chances of getting approved for a mortgage.

Improve your FICO score

Remember, a higher credit score lets you have a greater chance of landing better deals, interest rates and terms. You may have a below the minimum required FICO score for a home loan, but that doesn’t mean you can’t do anything to improve it. There are things you can do to give it a boost, and some of them are the following:

  • Start paying your debts on time and in full, whenever you can
  • Avoid opening new lines of credit to maintain a low DTI Ratio
  • Only use up to 30% of your credit balance monthly