With the fall and gradual rise of the economy
guidelines for Mortgage Lending has become more strict. Prior to applying for
any type of mortgage loan, the lender would pull ones credit report to determine
a credit mid score. A credit mid score was the middle FICO score determined by
the three main credit reporting agencies. ( Experian, Transunion
and Equifax)
Any mid score that was 600 and less was considered sub-prime. Major banks and
lenders would decline approval. Individuals still wanting to purchase a home
would seek out sub-prime lending corporations to get their mortgage. Often at a
high interest rate a subprime loan was a risk to say the least... Cinderella
may not have found her slipper this time.
Today the sub-prime of yesterday is no more..
Regulations have gotten tighter and lenders have become more cautious. The
minimum FICO mid score required has increased as well. Today anything under 640
will not be able to qualify for a standard mortgage loan. This of course was
set higher to not only make sure one had good enough credit but also that they
could adequately manage their finances.
There are a few things necessary to qualify for a
decent mortgage: regular income, low debt levels and adequate credit score. So
where does that leave those who either were before or have recently fallen below the qualifying
credit score to purchase a new home? With the tips below getting a mortgage
with a less than qualifying score can be done... Poor Poor Cinderella this time she's gonna
have to put a lil elbow grease into it.
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START BY IMPROVING YOUR CREDIT SCORE
The best
way to qualify for a mortgage would be to increase your credit score. This can
be easily done with a few simple changes in daily habits. Usually living with a
little common sense will help
drastically.
*
Live below your means and save any money left in an account for the future benefits
*
Pay your bills on time
*
Use credit cards sparingly or only in an emergency.
*
Do not take out loans or owe people money
*
Check your credit report but only request it one time every 6 months to a year.
To many inquiries will bring you score down alone.
·
Speak with a credit counselor or an agency who skilled in helping with
credit related issued.
*
Consumer Credit Counseling Agency
“We are a
non-profit agency committed to helping people help themselves become financially
strong individuals and families through counseling, debt management and
education”
*
Christian Credit Counseling
Service
“Christian Credit Counseling Service isn't your
typical credit counseling agency. Our goal is not to make money but to help
individuals and families who find themselves in financial crisis.”
·
Find a co-signer
If you are unable to find the time or if you
don't have the determination to do what’s required to help bring your FICO
score up you can always have a cosigner. The Co-signer will have to be able to
fully qualify for the mortgage loan himself. There are many draw backs to this
option and something I, personally, don't recommend. If at anytime you are late
with a payment your co-signer gets penalized. Thus creating a stressful
situation between the two of you.
·
Do your research
There are
a few places that an individual with a mid FICO score lower than 640 can buy a
home. Do your research and check around. Some examples.. USDA Rural Development , For Sale by Owners who are willing to carry
the note, Lease to own homes or even Independent investors financing their own
sales. You have to be willing to talk to these individuals. Be honest and
sincere, explain what your looking for and why you are in the situation your in.
(Take ownership of it... everyone falls on hard times don't try to say it was
due to someone else) Don’t forget to explain how it will benefit them to help
you. Think outside of the box and you may very well find that slipper
Cinderella was looking for!