Millions of people are looking to secure a mortgage but get discouraged if they have a bad credit score. One frequently asked question about mortgagesis, “Can I get a mortgage with bad credit?”. The short answer is yes, but you may also be denied a mortgage if you don’t go about it the right way.
However, the level of your score will determine which measures you will take to secure a mortgage. Meanwhile, you could also qualify for a government-backed loan if you have bad credit. Read this article to learn more about booking a mortgage with a bad credit score.
What do lenders consider a bad credit score ?
Only some intending borrowers know what a bad credit score is. Before we discuss the issue of buying a house with bad credit, you must understand what lenders consider a bad credit score. For some lenders, a credit score lower than 670 is considered bad. However, some lenders’ benchmark for a bad credit score is when it’s lower than 500.
Meanwhile, most lenders consider credit scores higher than 740 high and very good. The advantage of a high credit score is that you will get a lower interest rate. Therefore, a low credit score doesn’t stop a borrower from owning a house. However, borrowers with a bad credit score may have to do more to get a mortgage.
Step-by-step instructions on how to get a mortgage with a bad credit score
It is essential that you know what you are in for when you’re trying to buy a house with bad credit. To navigate through your home-buying journey successfully, then you need to take a look at the steps outlined below;
Find out your credit score
It would be best if you found your credit score before you start your hunt to get a mortgage. More so, your discovery will help you decide whether or not you need to improve your credit score before applying for a mortgage. Also, you don’t want to find out that you are not eligible for a loan after a lengthy house hunt. Most lenders provide access to your credit score for free.
Save more money
Even though you may have a bad credit score, with good savings, you can quickly get a mortgage. Lenders often request a higher percentage of the down payment from borrowers with bad credit scores. Therefore, you can make a reasonable down payment if you have enough savings. Furthermore, in most cases with good credit, the most common percentage required for a down payment is 3 percent. In other words, your application will be approved if you have a bad credit score and more than 40 percent of the mortgage.
Find a lender you can trust
Borrowers with a low credit score tend to ask more questions because their chances of getting a mortgage are limited. It would help if you reached out to a lender you can trust. A lender with experience who offers mortgages to borrowers with bad credit scores. No doubt, one of the lenders that can help is MortgageKey. They have provided loans to people with a bad credit scores.
On the other hand, if the lender doesn’t provide the required assistance to get the loan, then look for an alternative. Choose more than one lender to increase your chances of getting a loan.
Work with Realtor
Searching for a good home may be easier if you choose to do so with the help of a realtor. All you need to do is provide the realtor with features you want your new home to have. Also, reach out to a local real estate company to provide adequate guidance to get the best offer.
Conclusion
Unfortunately, some lenders will turn down your mortgage application. You have to consciously prepare your mind from rejections because a bad credit score is a red flag for most lenders. Nevertheless, if a lender denies your mortgage application, find out why they did so. With such information, you can improve. Finally, you obtain a mortgage bad credit score if you follow the steps outlined above. Contact lenders like MorgageKey for help now!
