You may already be aware that you have a lower credit score, or you may have learned about your credit issues after speaking with a mortgage professional.
Now that you are aware of the situation, you may be concerned about your ability to get approved for your loan request. After all, credit scores play a key role in a lender’s assessment of a mortgage applicant’s ability to get approved for a home loan.
The good news is that you may still be able to get a mortgage without a favorable credit history with a few things.
A Co-Borrower Or Co-Signer
One of the best steps that you can take to strengthen your loan request is to find a co-borrower or co-signor for your loan request. Ideally, this will be an individual with a spotless credit history and great scores.
There may be some rules in place regarding who can co-sign with you, so you may consider getting more advice from your mortgage representative before moving forward with this option. Further, the person who co-signs on your behalf should be made aware that in the event that you are no longer able to make mortgage payments, they will be on the hook to make them for you.
A Large Down Payment
The size of your down payment essentially impacts the level of risk that a lender assumes when extending a loan to you, and your loan request is riskier to approve when you have a lower credit rating. You may be able to offset the fact that you have a troubled credit history by making a larger down payment. This may be a down payment that exceeds a standard 20 percent down payment.
If that’s the case, you’ll want to take the time and make a valiant effort to save up as much as you can for a down payment. There may also be some down payment assistance programs available that you can tap into in order to beef up your down payment. Further, you may also want to consider buying a more affordable home to reduce your down payment obligation and the loan amount you request.
A Willingness To Accept A Higher Interest Rate
Mortgage lenders typically have a tiered interest rate structure, and those with a lower credit score will qualify for a higher interest rate. There typically is a minimum threshold to the tier system, and each lender has a different minimum score that they will consider. However, generally, if you have a lower credit rating, you should be prepared to accept a higher interest rate with your loan request.
A lower credit rating will impact your ability to get approved for the best terms on a mortgage, but this does not necessarily mean that you cannot get approved at all. There are various steps that you may be able to take to strengthen your loan request and to structure the loan application so that underwriting will approve it. You can speak with your mortgage consultant today about the options available to you.
Have Questions About Home Loans?
Are you curious about mortgages or are ready to apply for one? We can help. Sammamish Mortgage is a local, family-owned company based in Bellevue, Washington. We currently lend in all of Washington, Oregon, Idaho and Colorado. Since 1992, we have been offering a variety of mortgage programs to buyers, and we’d love to help you too. Please contact us if you have mortgage-related questions.