Mortgage

Are you thinking about buying a new house? Whether you’re a first-time or experienced buyer, if your credit score isn’t looking too hot it can affect how much mortgage financing you receive – or whether you’re approved at all! But don’t fret. It’s still possible to get a mortgage approved, even with credit issues. Below we’ll share a few ways that you can get a mortgage loan even if your credit is less than perfect.

Consider An FHA-Guaranteed Mortgage

For many individuals with credit issues, the Federal Housing Administration’s guaranteed loan programs are a good choice. In essence, the FHA guarantees your mortgage with select lenders, which allows them to worry less about the risk of lending to someone with past credit problems. It’s worth noting that FHA programs do come with some additional costs attached. Mortgage insurance may be assessed, which helps to protect the mortgage lender in case you default. And there may or may not be an additional monthly premium cost as well.

Do Everything You Can To Improve Your Credit Score

Before taking the next step and applying for a mortgage, you’ll want to ensure your FICO credit score is as high as possible. Call or visit the website of one of the major credit reporting agencies to get a copy of your credit report. You’ll want to review any outstanding issues on the report and eliminate anything that shouldn’t be there. For example, in the past, you may have had a credit card or small loan that went into collections yet is still in the report even though you paid it. Contact the credit agency to challenge anything that shouldn’t be on your report.

Don’t Stretch Beyond Your Means

If and when you’re approved for a mortgage, it’s critical to remember not to reach beyond your ability to pay the mortgage payments each month. Yes, it might seem like an excellent idea to get a larger or more luxurious house if a larger mortgage is offered to you. However, don’t forget that you’ll need to manage payments each month for many years and it’s tough to predict the future.

Try not to worry if you have a low credit or FICO score and you’re interested in buying a home. A great first step would be to contact your professional mortgage advisor. We’re here to help navigate the mortgage application process and can explain how your credit score will impact your chances.

Are you shopping around for a new house or apartment? One of the key considerations you will need to make is figuring out how much you want to invest in your new home. Below you’ll find our quick and easy guide to determining just how much “house” you can afford. Let’s get started!

Start By Making A Proper Budget

The first thing you’ll want to do is sit down and get a full budget put together. The easiest way to get the process started is to begin with two lists: income and expenses. For the income list, write down the amount of money your family brings in each month after taxes. If you have side income sources or extra income that tends to fluctuate over time, use the average amount for the past six months.

For the expenses list, write down all the spending that you do each month. Start with the major, stable items like rent, utilities and the like. Then work your way through to discretionary spending like dining out and other sources of entertainment. If it helps, go through your bank and credit card statements to ensure that you are not missing anything.

Once you have an accurate budget, you’ll know exactly how much you can afford to pay toward your mortgage payments each month.

Figure Out How Much You Can Put Down

Next, you’ll need to think about how much cash you want to pay as a down payment on your home. The larger the down payment you can afford, the smaller amount of mortgage financing you’ll need. While it might seem like a good idea to put as much as you can down, there are some things to consider. Any money you put against your down payment is going to be unavailable to you, which reduces your financial options. You’ll also lose the opportunity to invest it, which means missing out on potential returns over time.

Determine How Much House You Actually Need

Finally, give some thought as to how large or luxurious a home you want to buy. For example, if you have a small family and don’t need a large four- or five-bedroom house, you can instead opt for a smaller but more luxurious home. Conversely, if space is a priority, you may want to forego the high-end options to ensure you have enough room.

When you’re ready to explore your mortgage options, we’re ready to help. Contact your trusted mortgage professional at your convenience. We’re committed to helping you purchase the home of your dreams.