Perhaps
in recent years, you've had financial difficulties that caused you
to make a few late payments to creditors or even possibly not pay
some bills at all. You may have even had to file for bankruptcy. Now
your difficulties are over and you want to buy a home. Will it be
possible to get a home loan with a blemished credit history?
Although it may be a little harder than if you had A+ credit, the
answer is yes.
One of the first things you want to do is order a credit report.
There are three main credit reporting agencies: Equifax
(800-685-1111), Experian (888-397-3742), and Trans Union
(800-888-4213). [Because not all creditors report information to the
same agencies, you may want to request a report from all three.]
Once you have the report in hand, study it to make sure that the
information is accurate. If there are discrepancies, make sure you
follow the steps provided by the credit reporting agency to dispute
the information and get it changed. In addition, you may want to add
a consumer statement on your credit report to explain any late or
non-payment to creditors.
Depending on how damaged your credit is, you may want to put off
buying a home for another year. Use that time to repair your credit
by paying off creditors and create a history of paying your bills on
time and consistently.
When you are ready to apply for a loan, realize that your previous
credit history may limit your eligibility for prime loans and low
interest rates. When lenders are deciding on whether to issue a
potential borrower a loan, they use various criteria in addition to
payment history to evaluate the borrower such as employment, income,
assets and liabilities. Based on this evaluation, borrowers are
offered loans rated on a scale from A to D. The more damaged your
credit history, the higher of a risk you are to lenders.
Because of your blemished credit history, you will more than likely
have to get a "sub-prime" loan. These types of loans come
with higher interest rates and more points. Don't assume that just
because a lender offers sub-prime loans, that you will automatically
be embraced. Be prepared to explain to the lender why you had credit
problems and what you have done to prevent the situation from
occurring in the future.
Don't feel pressured into going with the first lender willing to
make a loan, doing so may cause you to pay more than you should. Get
to know your mortgage market. Shop several lenders, comparing
interest rates and fees, to obtain the best loan. Compare loan costs
line-by-line for various programs through several prospective
lenders. Also keep in mind, that there may be other ways to get a
lower interest rate, such as putting down a bigger down payment.
During your search for a lender, don't hesitate to solicit help from
your real estate professional. Be upfront about your credit record,
so that he or she can best determine financing solutions that work
for you.
Remember your past financial problems don't have to stop you from
experiencing the joys of homeownership.
If you have questions about your
credit, confer with your real estate professionals who can help
provide you with more detail with this or any other home buying or
selling subject..
We
can be reached at (310) 265-2130
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Financial company.
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