Don’t let your bad credit score crush your dream of owning a home. Purchasing property is harder with a bad credit history, but not impossible. Here’s what you need to know about bad credit and mortgages.
How to Qualify with Bad Credit
While your lenders will take your credit score into consideration when evaluating your loan application, they will also look at other factors such as your employment history and income-to-debt ratio. Banks are much more likely to overlook your poor credit if you have had steady employment and are making a good salary. Also, paying off your credit card balances before applying for a loan will give you a good income-to-debt ratio that will show your lender that you can afford the payments. However, you should be prepared to make a higher down payment or pay higher interest rates than people with good credit.
What Not to Do
You may have seen advertisement promising to help you get out of debt or erase your credit history “fast and easy.” Before you call the 900 number on the screen, you should know that most of these options are either illegal or ineffective. Paying off credit card debt is not a fast or easy process, and advertisements that promise this are either offering to help you file for bankruptcy (and charge you for legal fees) or involve you in an illegal scheme that could end up giving you a criminal record, according to the Federal Trade Commission.
Lease-to-Own
If your financial situation is preventing you from qualifying for a traditional loan, you may want to consider lease-to-own. This option allows you to live in the home that you want to eventually own, but you rent it while you are working on improving your credit score. The goal in lease-to-own is to eventually qualify for a mortgage, but if circumstances change, you are not obligated to.
You can qualify for a mortgage even if you have bad credit. Begin by taking steps to improve your credit score and become financially stable.
Check out some of the services like Tucson Home Loans that Tucsonmorgagerates.org offers its valued clients. Call us today – 520-696-8974 and allow us to be the Tucson mortgage lenders for your lending and refinancing needs.
