Get That House You Want Even with Poor Credit Scores
Everyone wants to have their own house someday, and a lot of us would want to live in a beautiful one. But, if you have a poor credit score, asking for home loans in Utah or any other state that are substantial enough to get you that large Victorian-style home may be asking for too much — or so what most people think.
Getting a loan with poor credit
If you want to buy a beautiful house, there are ways to go about this even if you have a poor credit score. But as Evolve Nevada explains, you will have to go through some lengthy preparations and make sacrifices, if necessary.
- Check your credit score
One of the first things you should do is to check your credit score. Even if you have an idea that it may be bad, you have to find out if it may not be as bad as you thought it to be. You can get your credit report from certain banks or credit card companies you’ve dealt with before.
- Fix any errors
Once you get your credit report, look for errors like unpaid credit. These can lower your credit score so make sure they’re fixed right away. If you don’t know how, there are tons of information online on how to look closely at credit reports.
- Choose an FHA loan
A Federal Housing Administration (FHA) loan is easier to get because they have lower credit requirements compared to mortgage loans from lenders and banks. But, be warned that an FHA loan has its downsides.
If you opt to get this loan, you should know that they come with a financial penalty. This means that as long as your loan exists or hasn’t been repaid fully, you cannot get rid of the private mortgage insurance. You’ll be paying double for your loan, unlike in other mortgage loans where you can eliminate the private mortgage insurance as soon as you build enough equity. Talk to your mortgage broker and discuss the possibility of getting an FHA loan and ask them if you can manage this kind of loan.
- Pay higher interest rates
Another way to get a good mortgage loan is to be willing to pay a much higher interest rate. It will be hard to do so, especially if your financial standing is not as stable, but if you can find other means to make money on top of your job, then see if you can pay a higher interest rate on top of your loan. Again, discuss this possibility with your mortgage broker so you’ll have a clearer view of your capability to repay your debt.
- Tell your lender you’re willing to pay a bigger down payment
Lenders are more willing to give loans if they see that a person is willing to shell out more money to pay back their debt. Informing your lender that you’re willing to pay a bigger down payment on your mortgage will tell them that you’re serious about repaying your debt. That would also mean that you’re more likely to pay it back on time, making you more appealing to lenders.
Getting your dream house is still possible even if you have a poor credit score. As long as you learn to manage your expenses and show your lenders that you’re capable of repaying your debt, you can qualify for a mortgage and get you that house you want.