You’ve heard about how important it is to have good credit when you want to buy an Escondido house. But, sometimes bad credit is outside of your control. Or, you may be in the process of correcting it and don’t want to have to wait to purchase an Escondido house until it’s all the way up to where you want it to be.
Luckily, credit isn’t the only thing that is playing a role in the lender’s decision to approve or deny your mortgage request. If you have bad credit you may still have an option of obtaining a mortgage. Here are a few strategies that can help you out.
The Federal Housing Administration provide mortgages that comes with less stringent approval guidelines. Escondido buyers can be approved for FHA loans with credit scores as low as 580. The main catch is that you need to be able to put 3.5 percent down on the house.
Most conventional loans are going to require you to have a credit score over 620. While FHA loans can be a good way to walk away with a mortgage they come at a price. These loans have higher fees than conventional loans.
If your credit score is lower than 580 you might need a larger down payment. Lenders like to see that a buyer has 20 percent to put down on the mortgage. This shows the lender that you have some skin in the game. They know that most people are not willing to risk losing their own money, so if you make a large down payment they think you will be less likely to default on your loan.
Therefore, if you have a lower credit score you can show the lender that you are a safer risk by having a larger down payment to make.
Most lenders are using computer systems now that tell them if they can approve you or not based on the algorithms in the program. However, lenders do still have the option to manually go through the underwriting process.
If you are initially turned down consider having your lender take another look and show them the things that will make a difference. For example, you might have a lot of debt, but if it’s all student loans that is a lot different than credit card debt.
If you are ready to buy an Escondido house and can’t get approved through a bank then try a private mortgage lender. This could be someone you know personally or just another investor that is looking to get into the Escondido real estate game.
If you go this route make sure that you have a real estate attorney look over all the documents before you sign.
If worse comes to worse and you aren’t able to buy an Escondido house right now remember that it doesn’t mean you never can. Start working on improving your credit right now to make future real estate transactions easier.