Are you looking to purchase a home, but do not have a great credit history? If so, you may be wondering how it will work, since you often hear how you cannot even get a mortgage if you don't have good credit. Here is what you should know about getting a mortgage without a good credit score.
Know What Bad Credit Is
The first thing that you have to look at is why you do not have a good credit score. The biggest problem is that you may be looking at just the number of your credit score, rather than look at what is actually on your credit report. Do you have a low credit score because you max out your credit cards, or because you are not paying your bills? If your credit score is low because you have high utilization from maxing out your credit cards, it is possible that this is something that a lender will look past or that you can easily fix. For example, opening more credit cards and not using them can improve your credit utilization, which shows that you have more self control over using your credit cards. If you simply have a lack of credit history, but no history of not paying bills, you are looking good.
Know What Mortgage Loan Officers Look For
You'll need to go through the application process in order to get a loan, and you'll work with a mortgage loan officer in order to get your mortgage approved or not. These loan officers are licensed professionals that have certain education requirements and training, and they won't just make a judgement call. The job of a mortgage loan office is to find borrowers that need financing, and to qualify borrowers that are capable of paying back their mortgage.
They are going to look through your application and try to determine if you are capable of paying off your mortgage. Things that they look for is your employment history. Have you been working at the same job for a long time and have stable income, or do you frequently change jobs? Does your current income levels mean that you are capable of covering the monthly mortgage payment and the property taxes? The loan officer may look at how much you are currently paying in rent per month, if you've missed rent payments, and if that payment is close to what the total of your mortgage and taxes will be.
Work closely with a lender that specializes in no credit financing for assistance with getting your mortgage.