Have you been turned away because of the following credit challenges?
Don’t let your past credit scores keep you from getting a home.
In just 2 minutes, you’ll know whether you can get prequalified.
INNOVATIVE LENDING SOLUTIONS MADE SIMPLE
Step One: Get Pre-Qualified
Pre-qualification is a simple process that will allow us to tell you how much you can finance and what interest rates will apply to your loan. We’ll need some personal information to get started so that we can get a feel for your income.
Step Two: Find Your Dream Home
Now that you have your pre-qualification letter, you’ll be able to house hunt. Once you find a great house, you can put in an offer and let the seller and their realtor know that you’ll be able to secure the appropriate funding to buy the home if they should accept your offer.
Step Three: Apply for Your Mortgage
Once the seller has accepted your offer, you can apply for your mortgage. At this stage, you’ll submit a lot of paperwork, including bank statement, pay stubs, and other important items. This process can seem tedious, but your Personal Mortgage Advisor will walk you through the entire way.
Step Four: Become a Homeowner
Once your application has processed, you’ll meet with your realtor and/or lender to sign closing paperwork. Be prepared to sign your name a lot during closing, as there are many documents that will require your signature. Once your closing paperwork is filed, you’ll officially be a homeowner!
Credit Challenged? Check out these tips!
If you’re struggling to get your FICO credit score up above 600; or if you’re slowly tacking extra debt onto your credit cards; or if you haven’t managed to squirrel away tens of thousands of dollars in your savings account—you may be thinking that home loan approval is a distant pipe dream.
In light of the housing crash of 2008, government-subsidized lending options have begun to take precedence while banks have begun reconsidering the way they look at new and first-time homeowners. While applicants once gave up hope if any one of these factors was sub-par, now buyers with seemingly hopeless scores are taking their chances and hoping for the best . . . to the tune of great results.
Scores of Success
While FICO credit scores range from 300-850, most people fall somewhere between 500-700. Once upon a time, you didn’t have a snowball’s chance in Phoenix to get approved for a home loan if your credit score was anywhere below 620. Nowadays, however, FHA loans (guaranteed by the Federal Housing Administration) are being granted to people with scores as low as 500!
Generally speaking, you’re going to have a much easier go of it if your score is 580 or higher, but this step away from conventional loans is the key to accessing the flexibility you’ll need to get approved. Beyond FHA loans, additional credit-challenged-friendly loans include VA loans and USDA loans.
Get Down with Down Payments
You’re probably sitting there thinking that you’re going to need at least 40K available out-of-pocket before you’ll be able to afford the down payment on your home . . . but not necessarily!
While traditional home loans may require up to 20% down payment (especially if you want to avoid MIPs), FHA loans can be attained with as little as 3.5% down—VA loans, on the other hand, require no down payment at all. These government subsidized loans, plus USDA loans, are great options for first-time buyers or credit-challenged borrowers who haven’t had the chance to save a huge sum for a down payment.
The Golden Ratio
Your debt-to-income ratio (DTI) is the third major factor that goes into determining the amount of risk you pose to lenders as a home loan applicant. This number—typically determined by dividing your total monthly debt (including the new mortgage payment) by your monthly income—is usually set to a maximum of 35% for manually underwritten loans. Higher FICO credit scores and down payments may merit the acceptance of a DTI as high as 45%. While most requirements for government subsidized loans are slightly less stringent than those for conventional loans, you’ll find that FHA and VA loan DTI requirements fall within these parameters at an average of 42%.
Making it Work
So, why the relaxed restrictions? Well, to begin with, the government doesn’t pay these loans—they merely guarantee them. Through measures including increased mortgage insurance premiums (MPIs), they can rest assured that they have the means necessary to pay off loans that go into default. In addition, most underwriters nowadays are getting more involved in the process and looking past simple scores to assess the fitness of a borrower. This means that you are more likely to get approved if you have a low credit score but low DTI, or if your low credit is a result of something unavoidable, such as medical bills. Long story short: unless you’re hurting in all of the areas listed above, your chances of getting approved might not be that bad!
Contact us today to discuss your options and see if an FHA loan is the right choice for you!
Other customers like you ...
“Nations Lending will work with you [even] if your credit score isn’t completely where it needs to be. They work with you every step of the way, weekends, holidays, you name it. I never knew getting a loan could be so stress free!!”
“I had many difficulties getting loan processed through [my other bank]. I had a bankruptcy about 4 years ago [so] their underwriting was hesitant to give final approval. Nations Lending took over my account . . . He got my loan processed under three weeks!”
“I had credit that was tortured by divorce and student loans and Nations Lending worked their magic and saved my loan.”
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