You Can Get a Home Mortgage Even with Less than Perfect Credit
There appears to be a lot of ‘doom and gloom’ people out there regarding qualifying and acquiring a home mortgage. But, but getting a home mortgage is not as difficult as these people say. Of course are some borrowers with near-perfect credit who are being rejected for loans, but that shouldn’t deter anyone from applying for a home mortgage. In fact, statistics from the Federal Financial Institutions Examination Council showed that in 2010 nearly 1 in 4 mortgage applications were denied.
Unfortunately these statistics appear grim, which ultimately dampens enthusiastic and potential borrowers from bothering to even apply. According to Bob Ryan, the Acting Commissioner for the HUD, or the U.S. Department of Housing and Urban Development, said that mortgage money is available. It’s moving but not as freely as it once did.
If you considering the home mortgage process, you should know that most mortgage lenders have returned to prudent standards that were in force prior to the housing bubble. If you’re looking for a government-run home mortgage, like with Freddie Mac and Fannie Mae, you’ll need to meet four main criteria:
• The ability to make a 20% down payment, plus closing costs.
• A good credit score. Borrowers usually need a minimum credit score of 620.
• Enough income to afford payments. The general rule of thumb: no more than 28% of your gross income should go toward housing costs.
• A loan-to-value ratio of 80%. Lenders want the home value to far exceed the mortgage balance because if a borrower defaults, the bank sells the home to recoup the loss.
But, this doesn’t mean you’ll always be successful even if you meet the four criteria above. So, where do you go to get the loans with less than perfect credit? The FHA are flexible home mortgage loans that are flexible and focused on easier lending to middle class, working class Americans. There is a required minimum of a 580 credit score to qualify for a 3.5% down loan and 500 credit score for 10% down.
There is still some hesitation, so most FHA loans will want to see a 640 credit score minimum for a 3.5% mortgage. But, when a lot of lenders are nixing applications with any blemish, the agency is willing to overlook even a big one, but only if other factors are favorable.
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