Buying a Home in Today’s Market
It’s possible to buy a home with a low credit score when you consider financing through a sub-prime or high-risk lender.
As the U.S. economy enters into a time of recession, thousands of people all across the country are struggling to make sense of the federal bailout and stimulus packages and what these new financial precedents mean for their personal finances. Despite the foreclosure and mortgage troubles that spurred the current crisis from the start, across the market, home prices and deals are dropping to lows not seen for many, many years.
Many financial experts are saying that it is now a great time to be in the market of looking to buy a home. With so many homes in foreclosure and so many mortgages defaulted on, many properties are even being touted as “steals” to potential buyers. If you are financially secure and in the market to buy a new home, now is the time to being searching the market, even if you have a low credit rating.
Video: How to Buy a House with Bad Credit
How to Buy a Home when You Have a Low Credit Score
Your credit rating (otherwise most commonly known as your “FICO score”) is based upon your history of credit card payments, loan repayments, and other such related statements. The acronym FICO stands for Fair Isaac Corporation, the company that devised and still computes credit scores. Your credit standing is intended to show the amount of probability that you will default on a loan. As such, the most common times your FICO score is checked is when you are seeking a mortgage, automobile loan, or consumer line of credit. The entire range for FICO scores spans from 300 to 900. Generally speaking, a score of 600 or below usually registers as a low credit rating. Sometimes, that figure is even 650.
Video: Why Knowing Your FICO Score is So Important
Having a low credit score can make getting a mortgage or home loan a very challenging task. When you go in seeking a line of credit, lenders will generally not offer the best interest rates or terms and conditions based on your perceived risk because of your low score. However, if you fall into the low-score credit range, your options are not entirely exhausted when it comes to seeking financing for your home purchase. Sub-prime and high-risk mortgage loan lenders lend specifically to those with lower credit ratings. Working with a broker is ideal, especially if you are not very familiar with the ins and outs of the sub-prime industry. Be sure never to accept the first offer made to, but rather, try negotiating for a better deal package. This method works even better when you have obtained multiple quotes from multiple lenders, allowing you to get an idea of what is available across a wide spectrum of choices.
Many reputable sub-prime lenders can even be found online, where you can research their offers and company history. One of the most common sub-prime loan packages involves a six-month to two- to three-year pre-payment penalty before you will be allowed to pay off or refinance the loan. However, once your credit score starts to improve, you will be able to negotiate with your lender to refinance at a lower interest rate. A 2/28 loan qualifies you with a fixed interest rate for 2 years. Make sure you research many options to find the one best suited to your needs and financial situation.
Eight Sub-Prime Mortgage Brokers
1. Quicken Loans, 20555 Victor Parkway, Livonia, MI 48152 800-708-9211
2. Bank of the Internet, 12777 High Bluff Drive, Suite 100, San Diego, CA 92130
877-541-2634
3. Abacus Credit, Online Company Only
4. Victory Mortgage, Kansas and Missouri, (816) 420-0600
5. Apex Personal Loans Store, 20944 Bay Court, Suite 345, Aventura, FL 33180
6. Avatar Financial Group, LLC, 100 Wall Street, Seattle, WA 98121
7. 1-888-886-0097
8. Consumers Advantage Mortgage, 5901 E. McKellips Road, #405, Mesa, AZ 85215
9. Citadel Investments, 153 Main Street, Suite 7, Sayville, NY 11782 866 9-CITADEL