Chicago, IL (PRWEB) December 27, 2013
When it comes to getting a mortgage, lenders, like The Federal Savings Bank, will take a hard look at your credit score to determine what type of borrower you are and what loan you might be qualified for.
After the recession hit and millions of homeowners fell into default on their loans, lenders tightened borrowing requirements, including those pertaining to credit scores. For a lot of potential homebuyers, this made it harder to get approved for certain types of mortgages. Fortunately, there are several different types of loans for Americans, and having less than perfect credit doesn't have to stop borrowers from getting a mortgage and buying a home.
VA home loan
For eligible veterans, a home loan guaranteed through Veterans Affairs is a great option that usually doesn't even have a credit requirement. Instead, VA home loans are based on length and type of service and duty. These loans also require very little down payment, if any at all, making them a very affordable option for veterans.
A home loan through the Federal Housing Administration is also a good alternative for someone with a lower credit score, as these lending standards are slightly looser than those for private mortgages. In addition, FHA mortgages also require a down payment as low as 3.5 percent, giving homeowners more options when it comes to their finances. However, FHA mortgages also require another fee, which can add to a monthly payment. For this reason, some borrowers decide to apply for a different type of loan.
Raise your credit score
Of course, another way to increase your options for getting a low cost mortgage is to raise your credit rating and score. In order to do this, you should first request a free copy of your credit report and check for any mistakes that could affect your score. It is important to note that your credit score may not come with your free report, but you can request a score for an additional fee. Credit scores are affected by the available balance, how much credit you have, types of credit and credit history. Payment history is a big portion of credit scores and late payments can have a negative impact on scores. To ensure your rating isn't affected, make all payments on time and try to reduce the balance you owe.
Contact the Federal Savings Bank, a veteran owned bank, to explore low rate mortgage options.