We offer qualified house buyers that pay cash or can submit multiple offers. Servicing Houston Texas, contact us at 1-832-377-0358 begin_of_the_skype_highlighting              1-832-377-0358      end_of_the_skype_highlighting.

Credit Scores and Home Buying

December 19, 2010

in Community Blog

Lots of Americans want to buy Ogden Real Estate , but don’t think they can qualify for a mortgage loan thanks to poor credit , no credit, or a bad credit history . To a traditional mortgage loan , buyers must have decent credit, but the FICO (Fair Isaac Credit) number is not the only factor that determines your credit worthiness to get a mortgage financing . If your FICO score of atleast 640, you can probably get a loan. When a credit score is above than 740 you can probably qualify for the prime rates assuming you match the other loan requirements . Loans backed by the FHA usually have less strict credit requirements .

Debt to Income Ratio

The DTI or debt to income level is also an important item lenders consider when underwriting mortgages . Banks don’t just want to see bills paid , they want to see that you have the income to support the mortgage and all your other debt . The general guideline many banks have is a  35% total debt to income , and of that debt, they will allow up to 28% for the home loan . If you don’t have much consumer debt: credit cards , car payments , student loans, etc. you can buy a nicer home . Some FHA loans and other Fannie Mae and Freddie Mac programs will permit higher debt to income ratios . For exact criteria, you will have to talk with a mortgage lender about your particular home situation .

If your debt to income ratio is too high , you won’t be able to buy a house even if you have an excellent credit rating .

People with poor credit scores, but good income to debt ratios , and a decent down payment can likely get a mortgage loan through sub-prime or private lenders, but they will have to pay for it. The rates will be substantially more expensive than traditional loans .

Home buying options for people with poor credit

If you have poor credit , try to fix it as soon as possible . Credit is repaired by having debt and paying it on time, and in full all the time .   Other options to purchase real estate with bad credit include: Rent to Own, Lease with an Option to Buy , or Seller Financing.

 

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