Lenders use this grading system to determine the amount of risk they are taking in
Philadelphia, PA (PRWEB) February 12, 2016
National Debt Relief recently shared in an article published January 29, 2016 how consumers can proceed with their homeownership dreams despite a challenging credit score. The article titled “Got Bad Credit? There Are Four Ways You Could Still Buy A House” looks into some valuable tips to consider when they find their score is too low for a mortgage loan.
The article starts off by explaining that there are a lot of numbers important to a person’s life. Those GPA scores to get a good college education as well as a good SAT or ACT score. As they graduate and take on jobs, their credit score functions the same way in regards to their financial behaviour. Lenders use this grading system to determine the amount of risk they are taking in if they decide to extend a loan instrument to a person including mortgage loans.
There are numerous reasons why a person would have a low credit score but for those dreaming of owning a home despite that, there are ways to go about it. The article shares that these would-be homeowners could save up for a large down payment on the house. This signifies the ability to handle the loans despite poor credit history, increases upfront equity on the property and lower loan to value ratio. It also shows that consumers are less likely to default on the loan because of the amount of money they are putting in.
The article also talks about trying to get an FHA loan rather than a Freddie Mac or Fannie Mae backed loan. This is because FHA loans can be approved with credit scores as low as 580 provided a downpayment of at least 3.5% can be raised by the consumer. These terms are much more lax compared to conventional mortgage loans.
It might also help for consumers to be upfront and talk to their lenders about their credit score. The article shares that some lenders can manually underwrite a loan if they see that the applicant can meet their loan payments. This can be because of on time rent payment or even reserve funds. To read the full article, click this link: https://www.nationaldebtrelief.com/got-bad-credit-there-are-four-ways-you-could-still-buy-a-house/