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 How to look for a mortgage is you have bad credit

If you have a bad credit, It’s possible to purchase a house with bad credit score, but you will end up paying a higher rate for the mortgage.

If your credit score is above 580, you can check VA loans, FHA loans, and USDA loans. Do not worry, If you cannot get approved now for a mortgage, there are ways you can increase your credit score so you can get a mortgage easily

You can buy a house with bad credit, but it might end up costing you extra money in the future.

The loans available to people who have a bad credit score do not require you to have a good credit score unlike traditional mortgages that require you have a good credit

If you’re buying a home for the first time, there are programs that are designed to help you qualify for a loan.  To buy a house, there are things you need to do

  1. 1. Provide copies of your credit report

Your credit report shows your personal details like payment history, and reports of bankruptcy Understanding the report helps you understand what exactly is affecting your credit score and getting it can help you figure out any errors so you can report, pay off debts, and increase your score. You are entitled to a free report from all the major three credit bureaus each year.

  1. See a housing counselor

Visit any HUD-approved agency and speak with a housing counselor as this will help you understand the different processes involved in buying a home such as how your credit score will factor in and the lending options available

They offer free or low-cost meetings that will help you understand the bad sides of becoming a homeowner. You can check on HUD.gov for the HUD-approved housing counseling agencies within your state.

  1. Work on rebuilding your credit

When you notice your credit score is poor, make some necessary steps to build it or if you notice that you are not qualified for a loan, take the necessary steps you make yourself creditworthy. Review your credit report from time to time so you can find out when you need improvements. If possible, lower your debt-to-income ratio by paying off debts and increasing your income.

There are some free tools available you can get from your credit card issued which will help you monitor your credit. They help you keep track of your credit score so you can find out when you can apply for a home loan. .

  1. Save for a down payment

When you save for a down payment, it shows lenders that you are serious about buying a house. Tjus people who have bad credit should consider saving and setting a larger down payment aside as it could help get a good mortgage rate.

Although there are mortgages that accept down payments of 3.5%, but you have to aim higher aiming

  1. 5. Apply for an FHA or lower-credit-score loan

Unfortunately, having a low credit score exposes you to mortgages with higher interest rate, which are the ones you can qualify and this means you will end up paying more interest throughout the loan period. You can speak to a housing counsellor or mortgage broker about your options.

You should also consider Federal Housing Administration loan. FHA loan come from a traditional mortgage lender and it is insured by the Federal Housing Administration. You may be qualified for aloan with a about 3.5% down payment and minimum credit score of 580, although some lenders have high requirements.

When you take an FHA loan you will need to pay mortgage insurance, which is also called mortgage insurance premium, throughout your mortgage period. Mortgage insurance is usually beneficial because   it insures you when you stop making payments on your loan.

If you are a veteran, you can also look for VA loans, they do not set a minimum credit score, but they usually typically prefer borrowers who have at least a 620 score. They are also similar to USDA loans, which are available to some living rural and suburban areas, though they tend to prefer borrowers who have score that is 640 or higher.[/vc_column_text][/vc_column][/vc_row][vc_row el_class=”seo-link-sec”][vc_column][vc_empty_space height=”50px”][vc_column_text][slick-slider category=”28″ design=”design-5″ speed=”2000″][/vc_column_text][/vc_column][/vc_row][vc_row el_class=”call-out-sec stretch-sec” css=”.vc_custom_1568018042545{background: rgba(0,0,0,0.88) url(https://imbonline.co.uk/wp-content/uploads/2018/07/counter-wrapper.jpg?id=1382) !important;background-position: center !important;background-repeat: no-repeat !important;background-size: cover !important;*background-color: rgb(0,0,0) !important;}”][vc_column][vc_column_text]

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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