Tips In Qualifying For Mortgage For Bad Credit Home Buyers

Tips In Qualifying For Mortgage For Bad Credit Home Buyers

This BLOG On Tips In Qualifying For Mortgage For Bad Credit Home Buyers Was UPDATED On August 1, 2017

The best mortgage for bad credit home buyers are FHA Loans. FHA Home Loans is the most popular mortgage for bad credit home buyers. The real estate and credit collapse has devastated millions of American homeowners.

  • Millions of Americans lost their jobs and/or businesses and were forced into bankruptcy during the 2008 Real Estate and Credit Meltdown. 
  • Others were hurt so bad by the economic collapse of 2008 that they could not even afford to file bankruptcy.
  • To this day some folks have bad credit and outstanding collections and judgments on their previous unpaid debt. 
  • Millions of Americans lost everything they have worked so hard  for.
  • Many witnessed their home values plummet where a large percentage of them had mortgage loans that were substantially higher than the value of their homes. 
  • Many were left with high monthly mortgage payments and could not afford their housing payment. 
  • They were forced into foreclosure. 
  • I used to own just under 3,000 residential units ( 7 apartment complexes ) and  personally lost my entire net worth due to the real estate and credit collapse of 2008. 
  • I personally lost millions of dollars and all of my commercial and residential properties. 
  • That is why I got into mortgage lending and decided to help others who were in my shoes and specialize in helping Mortgage For Bad Credit Home Buyers.

Home Loan After Bankruptcy And Foreclosure

Over 75% of my borrowers are folks who have either gotten a last minute mortgage loan denial or are going through major stress during the mortgage process. A substantial percentage of my clients are people who went through a prior bankruptcy, foreclosure, deed in lieu of foreclosure, short sale and have open collections, open judgments, late payments, tax liens, charge offs, and other types of prior bad credit. The are now back their feet and rebuilding their lives again and are ready to be homeowners again.

  • The good news is that everyone who has had prior credit problems can qualify for mortgages.
  • The Gustan Cho Team specialize in helping Mortgage For Bad Credit Home Buyers.
  • The question is not if I can get them a mortgage loan but WHEN can I get them a mortgage loan. 
  •  We help Mortgage For Bad Credit Home Buyers with credit scores under 600 FICO scores. 
  • We help borrowers re-establish their credit and boost credit scores to qualify for mortgage for bad credit home buyers.

Mortgage For Bad Credit Home Buyers With Outstanding Debts

The Gustan Cho Team represents a national mortgage banking firm and is licensed in most of the 50 states. We are nationally known for not having any overlays on government and conventional loans.

  • We understand that millions of Americans did not even have the legal fees to file for bankruptcy and time flies.  
  • Traditionally, mortgage lenders want open debts and collections to be paid before they will approve for a mortgage loan. 
  • We have no lender overlays so outstanding collections and charge off accounts do not have to be paid to qualify for FHA Loans.

Mortgage For Bad Credit Home Buyers With Outstanding Judgments

Judgments are tricky.

  • Judgments is probably the worst derogatory item anyone can have on  credit report.
  • Statute of limitations are normally 10 years on judgments in most states.
  • Judgments can be renewed for an additional 10 years in most states by judgment creditors.
  • Mortgage borrowers can qualify for mortgage loan with unsatisfied judgment as long as they have written payment agreement with judgment creditors. 
  • Mortgage lenders will want to see at least three months of steady payment history.
  • Lenders will want to see the payment agreement and copies of 3 monthly cancelled checks.  
  • Mortgage Borrowers do not have to file bankruptcy in order to qualify for bad credit mortgage loans. 
  • Consult with a lender with no overlays that specializes in Mortgage For Bad Credit Home Buyers.
  • It does not cost anything to consult with a mortgage broker that specializes in Mortgage For Bad Credit Home Buyers .

Mortgage For Bad Credit Home Buyers With Outstanding Collections And Charge Off Accounts

Mortgage Loan Applicants do not have to pay outstanding collections and/or charge off accounts to qualify for FHA Loans.

  • By paying an old collection account or old debt, credit scores can drop because of re-activating the Date Of Last Activity. 
  • By paying old collection accounts or old debts is reactivating the derogatory on credit report which will trigger as a recent derogatory. 
  • Mortgage Loan Applicants need to know that most statute of limitations on old collection accounts and old debt depends on the state.
  • Most states the statute of limitations on collections is 5 years depending on the state. 
  • Also, as old collection accounts and past due debt ages, it will have less and less impact on credit scores.

Establishing New Credit

The best, fastest, and quickest way to boost credit scores and improve credit is by getting at least three secured credit cards.

  • Mortgage Loan Applicants can order secured credit cards by going online and searching for secured credit card companies.. 
  • Make sure that the secured credit card companies report to all three credit reporting agencies. 
  • Mortgage Applicants can also try the local bank and see if they offer secured credit cards.
  • Make sure they report to all three credit reporting agencies; Transunion, Equifax, and Experian. 
  • Each secured credit card will boost credit scores by 20 or more points. 
  • I have seen clients whose credit scores improved over 100 points with just three $500 credit limit secured credit cards. 
  • Credit scores will continuously improve as secured credit card ages.

Late Payments After Bankruptcy And Foreclosure

Mortgage lenders normally want to see three credit tradelines that has been seasoned for at least a year with no late payments. Most lenders will automatically disqualify borrowers if they Late Payments after bankruptcy, foreclosure, deed in lieu, short sale. They consider this as a second offender. However, late payments after bankruptcy and/or foreclosure is not an automatic disqualification. As long as the Automated Underwriting System renders an approve/eligible per AUS, borrowers can qualify with late payments after bankruptcy and/or foreclosure.

  • Borrowers can still qualify for a mortgage loan with one or two late payments but not with a late payment in the past six months.
  • Consumers should enroll in a credit monitoring service as well to alert you any changes on credit report.

Good Credit Scores Yields Low Mortgage Rates

Having good credit is so crucial and important that every consumer should always be conscious of credit and credit scores.

  • Having bad credit will cost thousands, if not hundreds of thousands, during a person’s working life.
  • This is because they will be paying higher mortgage rates on home loan, higher interest rates on credit cards, and higher insurance premiums. 
  • Most employers now do background credit checks as part of their employment hiring and promotional process. 
  • Bad credit can potentially cause job and promotional opportunities.

Home Buyers who need to qualify for a mortgage for bad credit home buyers can contact us at 1-800-900-8569 or email us at We are available 7 days a week, evenings, weekends, and holidays.

Related> Bad Credit Home Loans: Under 580 Credit Scores

Related> Bad Credit Mortgage Loans: FHA To The Rescue

Related> Home Loan With Bad Credit

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