Advice In Buying New Home With Bad Credit

This BLOG On Buying New Home With Bad Credit Was Written By Gustan Cho NMLS 873293

You do not need perfect credit when Buying New Home With Bad Credit and Lower Credit Scores. Home Buyers who are interested in Buying New Home With Bad Credit and Bad Credit can do so with a FHA Loan. If you are thinking about purchasing your first home and are ready to be a first time home buyer, here are some tips prior to entering into a real estate purchase contract.

  • You should first narrow the area you will begin your search. 
  • Check out the amenities in the area you think you will buying your home. 
  • How far is it from your work? 
  • How close is it to major expressways? 
  • How are the schools? 
  • How close is shopping centers? 
  • How much are the property taxes compared to neighboring areas?  
  • You can contact a realtor to enhance your search and get their opinions. 

Once you have narrowed your property search in which geographical area you want to purchase a home, I would seek the advice of a mortgage lender.

Consult With Mortgage Lender Specializing Helping Buying New Home With Bad Credit

Buying New Home With Bad Credit requires a loan officer and lender that specializes in mortgages with bad credit. Your loan officer will make sure that you qualify for a loan program with your credit and income profile and see what the maximum amount of loan you qualify for. Here is a basic typical mortgage process:

  • Your mortgage lender will need to take a preliminary mortgage application and will need to run credit. 
  • He will analyze your income, assets, debts, liabilities, credit, credit history, credit report, and determine what your maximum proposed housing budget will be and the maximum home you can qualify for. 
  • Property tax and insurance information will be estimated using comparable properties in the areas you are interested in.

Down Payment And Closing Costs

Your mortgage lender will also tell you approximately how much down payment you need to have and what the tentative closing costs will be.

  • The mortgage lender will then review your two years tax returns, two years W-2s, 2 months bank statements, and other documents and determine the maximum amount you qualify for. 
  • Your mortgage loan officer will then issue you a pre-approval letter so you can now hire a realtor and go shopping for your new home.

Buying A New Home With Bad Credit : What If I Don’t Qualify?

If you have had recent bad credit or other financial issues, you might not qualify for a mortgage loan.  However, as long as you have income but had prior credit issues, your mortgage loan originator can help you prepare you in getting a mortgage in the near future.

  • Your mortgage loan originator can either send you to a credit consultant or many mortgage loan originators, like myself, help future mortgage loan borrowers with their credit so they can qualify for a mortgage loan. 
  • If you had a bunch of recent late payments, you may need to wait six months to twelve months before you can qualify for a mortgage loan. 
  • Most mortgage lenders want to see at least a 12 month payment history with no late payments. 
  • If your credit scores are below 580 FICO and you can only put down 3.5%, you may have to wait until your credit scores can be boosted up to a 580 plus credit score. 
  • Raising credit scores can be done by paying down credit balances or adding secured credit cards.

Mortgage After Bankruptcy And Foreclosure

Also, those who recently filed bankruptcy or had a foreclosure, they can start prepping themselves up in getting qualified ready to be homeowners by re-establishing their credit as soon as possible.

  • You need to realize that there are mandatory waiting periods to qualify for a residential home mortgage loan after you have had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. 
  • For bankruptcy, it is a two year waiting period from the discharge date and for a foreclosure, deed in lieu of foreclosure, short sale it is 3 years. 
  • However, just passing the waiting period does not automatically qualify you for a mortgage loan. 
  • Mortgage lenders want to see 4 established credit tradelines that have been seasoned 12 to 24 months and they do not want to see any late payments after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. 
  • Rental verification is a must. 
  • The only way the mortgage lender will accept rental verification is by providing 12 months of cancelled checks or a letter from a registered property management company.

Choosing The Right Lender When Buying A New Home With Bad Credit

FHA does not require borrowers to pay off outstanding collections and charge offs to qualify for FHA Loans. However, most lenders have overlays on FHA Loans and may have you pay off outstanding unpaid collection accounts and charge off accounts. The reason is due to lender overlays. Overlays are when a lender will have their own mortgage guidelines that have higher standards than those of FHA, VA, USDA, FANNIE MAE, FREDDIE MAC. When Buying A New Home With Bad Credit, you need a loan officer and lender who has no overlays. The Gustan Cho Team at CrossCountry Mortgage is a national five star lender licensed in 50 states with no overlays on government and conventional loans.

By Gustan Cho NMLS 873293

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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