Things to Consider When Getting a Mortgage With Bad Credit

Things to Consider When Getting a Mortgage With Bad Credit

Just because mortgage guidelines have gotten so much stricter, does not mean that people no longer wish to purchase a home. The reality is that buying a home when you have bad credit is much more difficult than it once was. Of course, there was a time when getting a mortgage required little more than having a pulse!

If you have bad credit and would like to buy a home, the very first thing that you will want to do is work to improve your credit score. Get a copy of your current credit report and review it to make sure that there are no errors in it. If there are errors, you will need to dispute these directly with each of the three credit bureaus. If you have a good bit of revolving debt, you will want to do everything that you can to get as much of this paid off as possible. Pay off open accounts first because this will help your credit utilization ratio - the ratio between the credit you have available to you and what you are using - and increase your credit score. If you have a spouse or a parent with very good credit, get them to add you to one of their existing credit card accounts. Just be sure that it is an account with a low balance and good payment history.

If you have collection accounts, try to save up the money to pay these accounts off in full. Then, call the lender and see if they would be willing to arrange a pay for delete. This is where an agreement is put into writing that stipulates that once they have full payment on the account they will delete it from your credit file.

Of course, these things will not completely cure your bad credit, but they should help the situation a good bit. While there are a few options available for bad credit mortgages, they are very few and far between. For most purposes, an FHA loan is going to be the way to go if you have bad credit.

To qualify for an FHA loan, you will need a FICO score of at least 620. If you have filed for a Chapter 13 Bankruptcy trustee. If you have had a foreclosure, you will need to be three years from your foreclosure date.

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