Poor Credit Home Mortgage Loans
September 20, 2009 by admin
Filed under Mortgage Loans
If you are hoping to get a home mortgage loan but you have a history of bad credit, then you need to learn about the FICO system of credit scoring and how it works. The people at Fair ISAAC & Company (FICO) is the main credit reporting agency that lenders go to when they get to the portion of your application for a home mortgage loan in order to score your credit, so they are going to know your credit history.
Due to a decision passed down by the U.S. Congress, the FICO formula cannot be published. You can gain a better understanding of how you can get approved and why you might be denied by knowing some general things about FICO:
1) You have a stronger chance of qualifying for a mortgage loan for your home with a high FICO score. Your chances improve for negotiating a lower rate of interest as your FICO score goes higher.
2) It is very unlikely that you will be approved to get a mortgage loan if your FICO score is less than 500; however, a score between 500 and 600 may be high enough to get you a mortgage loan if you are willing and in a position to make a down payment. You should qualify for a no money down 100% home mortgage loan if your FICO score is between 600 and 640. You should qualify for a loan of 125% of what you actually need if your score is between 640 and 700. With a score over 700 you will be able to get a home loan with great terms and a great rate; you will be in control.
4) Get copies of your credit report and make sure there is no false information on it before applying for a mortgage loan, especially if you have a history of bad credit; the credit report is what FICO looks at to make their determination. Get any false information taken off of your report before you fill out the loan application.
4) Don’t buy anything else on credit until after you have finalized the purchase or refinancing of your home. Even if you have a FICO score over 600 prior to purchasing anything else on credit, the additional loan or greater credit balance can have a major impact on the approval of your mortgage loan.
5) Don’t give up if you don’t get the home mortgage loan on your first attempt; your FICO score is actually only a part of the application, and there may still be lenders who are willing to do business with you.
The credit scoring system is a mystery to most people; if you are dealing with a lender for a home loan or a sub prime mortgage and have less than perfect or bad credit, it is worthwhile to learn all you can about the system and how it works.
Comments
Feel free to leave a comment...
and oh, if you want a pic to show with your comment, go get a gravatar!