When saving money buying a house, remember one key thing, low rates with FICO credit scores. This article will cover how to get low rates with high FICO for mortgages. It is possible for a homebuyer to qualify for a home loan with bad credit. Borrowers who do not meet the minimum credit scores to qualify for home loans can improve their credit scores to qualify for mortgages.
This guide on buying a house will explain how you can get low rates with high FICO credit scores. There are several variables in getting a home loan with low credit scores. Low credit scores mean high rates. To qualify for a mortgage, borrowers must meet minimum credit score requirements. You need to increase your credit score if you do not meet the minimum credit score to qualify for a mortgage.
Can I Get Low Rates With High FICO For a Mortgage?
Yes, you can get low rates with high FICO credit scores. Homebuyers with low credit scores will get high mortgage rates. High mortgage rates will cost you thousands of dollars of interest expense over the loan term. The best way to get low rates with high FICO. This blog will guide you on how to get low rates with high FICO.
The easiest and fastest way to rebuild and re-establish credit after bankruptcy, foreclosure, deed-in-lieu of foreclosure, short sale, late payments, and period of bad credit is to get three to five secured credit cards and one or two installment loans. The most effective way to maximize your credit scores is to get three to five secured credit cards with at least a $500 credit limit.
How Can Homebuyers Maximize Credit Scores Before Starting The Mortgage Process
Gustan Cho Associates can help borrowers maximize their credit scores before applying for a mortgage. Mortgage borrowers do not have to hire expensive credit repair companies before applying for a mortgage. Credit repair companies can do more damage during the mortgage process than help. Older outstanding collections and charged-off accounts do not have to be paid to qualify for a mortgage at Gustan Cho Associates.
Credit disputes on non-medical collections and other derogatory credit tradelines are not allowed during the mortgage process. Disputing non-medical collections can halt the mortgage process until the credit disputes are removed. Older collections, charged-off accounts, late payments, or other derogatory credit tradelines have little to no impact on credit scores. The team at Gustan Cho Associates has helped thousands of consumers rebuild and boost their credit scores.
Boosting Credit Scores To Get Mortgage Approval
There are quick fixes to boost credit scores. Those who do not meet the minimum credit score requirements can improve their credit scores to qualify for mortgages. Adding positive credit after bankruptcy, foreclosure, a deed-in-lieu of foreclosure, short sale, and periods of bad credit is the easiest and fastest way of rebuilding and reestablishing credit. There is no reason why consumers cannot have a 700 credit score in less than one year after the bankruptcy discharge date.
The easiest and fastest way of adding positive credit after bankruptcy, foreclosure, and period of bad credit is by getting three to five secured credit cards with at least $500 credit limits and one installment loan. Gustan Cho Associates will show you step-by-step instructions on rebuilding and reestablishing your credit and getting to a 700 credit score in one year after bankruptcy, foreclosure, or after a period of bad credit.
Common Reasons Why People Get Bad Credit
Bad credit happens to the very best of us. Most people’s credit suffers after bankruptcy, foreclosure, a deed-in-lieu of foreclosure, a short sale, or a period of bad credit. Income interruption is the main reason people file for bankruptcy or lose their property through foreclosure. Disruption of income happens when people lose their jobs and have medical issues. Income disruption makes it impossible for people to make timely payments on their monthly bills unless they have savings.
Government and conventional loans require a minimum waiting period after bankruptcy, foreclosure, deed-in-lieu of foreclosure, or short sale. Just waiting out the minimum period after bankruptcy and a housing event does not automatically guarantee borrowers qualify for a home mortgage Lenders want to see rebuilt and reestablished credit after bankruptcy and a housing event with no late payments.
Can I Have Late Payments After Bankruptcy and Get Mortgage Approval?
Any late payments after bankruptcy and foreclosure are frowned upon by lenders. Most lenders will not want anything to do with borrowers with late payments after bankruptcy and a housing event.
One or two late payments after bankruptcy and a housing event are not always a deal killer at Gustan Cho Associates. Late payments after bankruptcy are not a problem as long as the borrower can get approve/eligible per the automated underwriting system (AUS). The best way to get an approve/eligible per automated underwriting system with late payments after bankruptcy is to have multiple other credit tradelines that are not late with any payments.
Main Reasons Why Consumers Cannot Pay Minimum Monthly Debt Obligations
The following are the most common reasons why people cannot pay their minimum monthly debt obligations and why their credit suffers:
- loss of employment
- loss of business
- deed-in-lieu of foreclosure
- short sale
- death in the family
- medical reason
- other extenuating circumstances
Lenders want to see borrowers have rebuilt and reestablished their credit and income profile after they had a financial and economic impact.
Financial Responsibility By Showing Rebuilt Credit With Timely Payments
Most lenders will not approve borrowers with late payments after bankruptcy, foreclosure, deed-in-lieu of foreclosure, or short sale. Any loan applicant who had late payments after bankruptcy and a housing event is often referred to as a second offender in the mortgage industry.
Lenders understand that people go through periods of bad credit due to one or more of the above reasons. It is alright to have had prior bad credit, outstanding collections and charged-off accounts, late payments, prior bankruptcy, prior foreclosure, prior short sale, prior deed-in-lieu of foreclosure, or other derogatory credit issues.
How Long After Fixing My Credit Can I Buy a House?
Lenders want to see borrowers have rebuilt and re-established their credit with no late payments after the prior bad credit period. Timely payments in the past twelve months show financial responsibility and are key in getting a home mortgage approval.
The above reasons can lead to income loss or substantially reduced income. However, most people recover after an economic and financial impact on their lives. Lenders want to see rebuilt and re-established credit after the borrower has recovered with new employment.
The Importance of Timely Payments In The Past 12 Months
You can have prior bad credit with outstanding collections, charged-off accounts, and late payments and still qualify for a mortgage. This holds true as long as you have been timely in the past 12 months and you get an approve/eligible per the automated underwriting system (AUS).
You would not get an approve/eligible per AUS if you had multiple late payments in the past 12 months. Timely payments in the past 12 months are key in getting an approve/eligible per the automated underwriting system (AUS).
Loss of Employment and Income
Loss of income due to the loss of a job is the main reason why people cannot receive their monthly debt payments. This causes borrowers to get behind in making their regular minimum monthly payments. This affects their ability to make monthly payments, and their credit scores drop. Mortgage lenders do have minimum credit score requirements to qualify for a mortgage. For example, to qualify for an FHA loan with a 3.5% minimum down payment, borrowers need a 580 credit score.
Borrowers can qualify for FHA loans with credit scores under 580 and down to 500 FICO, but a 10% down payment is required per HUD Agency Mortgage Guidelines. Just because you do not meet the minimum agency mortgage guidelines does not mean you will not qualify for a mortgage by doing some quick fixes. Most loan officers are experts in boosting credit scores using quick fixes like paying down credit card balances and getting secured credit cards.
Qualifying For Mortgage With Credit Scores Under 620
However, having credit scores under 620, the debt-to-income ratios are restricted at 43% DTI. For borrowers with credit scores over 620, the debt-to-income ratio greatly increases to 56.9% DTI. To qualify for a conventional loan, the minimum credit score required is 620.
With conventional mortgage rates, the lower the credit score, the higher the mortgage rates. To get the best conventional mortgage rates, the conventional mortgage loan borrower needs a credit score of over 740. With FHA mortgage rates, anyone with a 640 credit score will get the best mortgage rates.
Credit Score Requirements on Loan Programs
Every loan program has its minimum credit score requirements. A minimum credit score of 580 is required for 203K Rehab Loans. A 620 credit score is required for bank statement mortgage loans for self-employed borrowers. Non-QM Loans require a 640 credit score.
Portfolio lenders specializing in condotel and non-warrantable loans require a minimum of 680 credit scores. Gustan Cho Associates offers 90% LTV jumbo mortgages with at least a 660 credit score. To get the lowest mortgage rates on jumbo loans, borrowers should have a 740 credit score.
Getting Qualified For Home Loan With Bad Credit
Homebuyers thinking of buying a home very shortly should consult with a mortgage lender as soon as possible and see if they qualify for a mortgage. Borrowers not qualified for a mortgage due to lower credit scores, there are some quick fixes loan officers can advise to boost credit scores.
For example, if credit scores are between 500 and 579, borrowers will not qualify for a 3.5% down payment FHA loan. The minimum credit score required for an FHA loan with a 3,5% down payment is 580. Getting a one-point boost in credit scores should not be too difficult.
Boosting Credit Scores To Improve Credit Scores To Qualify Mortgage
Credit Scores go up and down. There are quick fixes to improve credit scores to qualify for mortgages. Borrowers can probably get several-point credit scores to boost by paying down credit card balances. Or if credit scores are at 579 because the borrower has no active credit accounts, getting one secured credit card can boost credit scores by 20 or more points.
There are ways of boosting credit scores by adding oneself to someone else as an authorized user. However, to have this authorized user credit card work, the authorized user needs the same last name as the main cardholder and has the same billing address.
How Fast Can My Credit Scores Be Boosted To Get Low Rates With High FICO?
Improving credit scores takes time and does not happen overnight. If borrowers were to get a secured credit card to boost credit scores, it would take at least a week or more to get a secured credit card.
Once consumers use it, depending on when they get a secured credit card, it will not post to the three credit reporting agencies until the end of the month. New credit scores will be reflected at the beginning of the month.
What Is The Timeline To Boost Your FICO To Get Mortgage Approval?
For example, say the borrower applies for a secured credit card on May 1. They will most likely get a secured credit card on May 10th. Borrowers use credit cards, and credit statements will post by May 31st. The three credit bureaus will have new credit posted by June 5th. So in a little over 30 days, the new credit card will be posted to all three credit reporting agencies.
The same concept goes with high-balance credit cards. Borrowers intending to pay down credit cards to boost their credit scores need to pay for them early enough. This way, it posts to all three credit reporting agencies by the end of the month. New credit balance information will be reflected on the credit report by the beginning of the following month.
Best Mortgage Lenders For Bad Credit With Low Rates
Homebuyers who need to qualify for a mortgage with a lender licensed in 48 states with zero overlays on government and conventional loans can contact us at Gustan Cho Associates at 800-900-8569. Text us for a faster response. Or email us at email@example.com. We are a five-star lender with 5 Star Reviews.
Gustan Cho Associates has a national reputation for being able to do mortgage loans other lenders cannot do. Licensed in 48 states with over 190 wholesale mortgage lenders, Gustan Cho Associates has hundreds of wholesale lending partners with no overlays on government and conventional loans and non-QM and alternative loan programs. Gustan Cho Associates offers mortgages with terms ranging from 10 to 30 years. We have mortgage loan option of longer terms allows borrowers to take on larger loan amounts while keeping monthly payments more affordable. However, the longer the term of your loan, the more interest you will pay.
Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays. The team at Gustan Cho Associates can help you get low rates with high FICO credit scores for a mortgage loan. We are experts in helping borrowers maximize their credit scores to get low rates with high FICO.