What’s Going to Help You Get Approved? – To get 100% financing on your mortgage, that means that you have no down payment, which puts more emphasis on the other factors going toward your mortgage loan. For example, you will need to be stronger in the areas like income, employment, recent payment history, low debt-to-income ratios. If you can strengthen some of these factors you will have a better chance of getting approved. If you can find a home with a low loan-to-value rate, that may also help your chances of getting approved. Search around. Try to find a home that is being sold for much less than the appraised value.
What’s Going to Hurt You? – A super recent bankruptcy or foreclosure. Although it is not impossible to get financing under these circumstances, it makes it more likely that you will need some kind of a down payment.
Watch Out For Sub-prime Mortgage Scams – Borrowers with poor credit are often the target of inflated interest rates and excessive fees. With adverse credit history, you can expect to pay a slightly higher interest rate, but make sure you compare at least 2-3 other loan offers to be sure that your interest rate is competitive.
What About After Bankruptcy Mortgages? – You can expect to wait 2-3 years after the bankruptcy discharge date before mortgage lenders will be completely open to working with you. However, it’s not impossible to get approved for a mortgage loan before that time, you just may need a small down payment.
Beware of the Pre-Payment Penalty – Mortgage lenders lending to people with bad credit usually tack on a pre-payment penalty to the borrowers mortgage loan. If you are ok with a pre-payment penalty, make sure it is for a reasonable length of time, maybe 6 mo. to a year. You don’t want to lock yourself in to higher interest rates for very long.
CL Haehl
http://www.articlesbase.com/finance-articles/100-financing-no-down-payment-home-loans-for-people-with-bad-credit-or-past-bankruptcy-114997.html
Questions about a new home mortgage financing?
Hi! My husband and I want to purchase our first home in the next year or so. I have a question regarding our credit. Each of our FICO scores is between 610-620.
We have never filed for Bankruptcy, had a car repossessed or even missed a credit card payment. Our score is low because of a TON of medical bills we have been slowly paying off when our son became very ill before our new insurance kicked in. The bills are unfortunately on our credit.
My question is, with the credit crunch going on would we be able to qualify? We live in San Diego, so housing is outrageous which means we will only be able to come up with about 5% down (house prices approx. $700,000).
I would greatly appreciate input from people who have obtained loans in the past couple of months, and also people in the banking industry.
Thanks so much!
First off, are you sure it is medical that is hurting your credit, and not something like high balances on your credit cards? Probably one of the most misunderstood parts of the credit score equation is debt versus available credit. That being said, if everything else looks good(time on job, debt to income and all that) and you have a decent amount in 401k or some other type of reserves, there shouldn’t be a problem.
References :
Was a mortgage broker for years and bought a house in August.
Well WFR is incorrect. As far as I know with a jumbo loan amount like that there is no 100% financing available especially in most of CA right now regardless of loan amount unless you are going with a VA loan or Calhfa first time homebuyer program. Now with a sales price of $700,000 FHA is definitely out of the question because they do not go that high. But there is good news on the horizon. Possibly within the next month or so the conforming limit may be rising to between 600,000 – 700,000. When and if this happens it will open a lot of doors for you for financing and 5% down would work. So kind of hang in there and see what happens. It could make a huge difference in your payment.
Now with 5% down you will need to pay PMI. You want to make sure your middle scores are no less then 620. If it is then you’re PMI will be substantially higher. Have a loan consultant pull your credit and review it to see if there is anything you can work on now to raise your scores. If your medical bills are older and you pay them now it could lower your score. If you have high balances on your credit cards it could affect your score too. You need to have someone who understands credit reports review yours to get you going in the right direction.
I hope this helps.
References :
CA Lender 22 years