Getting a mortgage is one of the most difficult things in life. It is even more difficult when you have bad credit. Some banks will not give you a home loan if your credit score is below 650. That’s why people with low credit scores are finding it challenging to get approved for a home loan.
But there are some ways they can get approved.
Work with a Trusted Lender
Working with a trusted mortgage lender or broker can help to educate you on which type of loan may be best suited for your financial situation. Similarly, understanding the different types of loans available such as mortgage loans, home equity loans, and line of credit loans can also help in creating more realistic expectations for financing options.
There are also many loan programs that offer loans for people with low credit scores. Some of them include government loans, FHA loans, VA loans, and more. Speak to your trusted lender to determine if you qualify.
Using an Alternative Lending Company
Another way to get a home loan with low credit would be to go through an alternative lending company like LendingTree, which may approve you for a home loan despite your low credit score.
Another option is to avoid applying for loans with banks and instead apply with non-traditional lenders like Quicken Loans, who may not require an applicant’s credit score in their approval process, but still require proof of income and proof of employment.
Get Help from Family
There are many different ways to get help from a family to afford a mortgage loan. For example, you can ask your parents for a co-signer on your loan. This is the best way to get the lowest rates but it might put their credit at risk if you default on the loan.
You could also have them take out a home equity line of credit so that you have access to funds when needed. This may be an easier option for people who are retired or nearing retirement age because this option will not affect their credit score.
Consider Renting
Renting to build your credit score is an option for people who are looking for a way to earn income and build credit before they’re able to purchase their own home. It’s also for those who want to establish a track record of timely payments before they try and buy a house on their own.
Renting allows you to build up your credit without any risk of losing money on a property if it doesn’t go as planned. It also means that you never have to deal with issues like home maintenance or repairs.
The Road to Home Ownership
Accountability is the key to financial success. We know it takes time and patience to achieve your goals. It’s hard work but worth it! Follow these tips to successfully obtain a home loan even with low credit.
If you’re interested in finding out more about the costs you should be expecting with home ownership, utilize this house payment calculator for an accurate estimate of your expenses.
