Are you wondering if you can get a mortgage with your
current Credit Score? I am sure everyone is sick of hearing
about the current credit crunch. It is a never ending cycle
in the lending industry. The banks loosing up and
everything starts to foreclose. The banks tighten up and
less people are buying homes because they don't have the
credit to buy with all the new restrictions. Either way the
"American Dream" of home ownership is always on our minds.
It's that one common thread of personal accomplishment that
all Americans strive to achieve. I know that most people
want a piece of the American pie.
I am going to discuss the current plain old vanilla loans
that are available to you, and what it will take to get
into one of these loans.
FHA loans
FHA loans have been around since the mid 1930's, and is the
biggest insurer of loans in the world. (FHA), Federal
Housing Authority is a government insured loan that is more
attractive to bankers because there is less risk. Basically
this type of loan is the strongest loan in the current
market. The reason for this is the guidelines to get this
type of loan are still the same as they were 5 years ago.
There is less requirements to get into a FHA loan, and has
a minimum down payment requirement. Here are some key
points as to why FHA loans are so attractive today and will
continue to be one of the top loans out there.
- Low down payment of 3%
- Will Allow Down Payment Assistance, which eliminates you
needing 3% down payment
- Low interest rates
- No Credit Score Requirement
- Allows hardship loans, for individuals that have had past
credit issues.
- Allows you to get a loan while in a Chapter 13
Bankruptcy, conditions apply.
- Allows you to get a loan with no credit, typically the
underwriter will ask for alternate lines of credit.
Examples:
1. 12 month payment history in good standing from three
sources.
a. Electric provider
b. Car Insurance provider
c. Day Care
d. Cell Phone Company
This is just some examples of how someone who does not have
credit reporting on their credit report can use alternate
sources of payment history to show creditworthiness. You
cannot do this with Conventional loans that are backed by
Freddie Mac and Fannie Mae.
Conventional Loans
Conventional loans are loans that are not insured by the
Federal Government. They are loans that are secured by
government sponsored entities, such as Freddie Mac and
Fannie Mae. These types of loans are stricter in the
approval process, and are typically run through an
automated software process. This process either says "yes"
or "no." With all the current tightening up in lending,
this particular loan is less attractive for borrowers with
credit issues and low credit scores. With all the current
foreclosures and the tightening up with Mortgage Insurance
companies, there is a credit score requirement of 620 or
above with conventional loans currently.
Since we are going through obvious changes in lending
currently, it is very important you know where you
currently stand with your credit score. There are some
changes going on in FHA as well, even though FHA does not
have a credit score requirement the bank that buys these
loans may. So if you have low credit scores, you might need
to increase that score even to get a FHA loan in this
current market. Get a current copy of your free credit
score report, and if you have issues there has never been a
better time than now to work on your credit so you can buy
in the near future.
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About the Author: Mike Clover is the owner of
http://www.creditscorequick.com/ . CreditScoreQuick.com is
the one of the most unique on-line resources for free
credit score report, fico score, Internet identity theft
software, secured credit cards, student credit cards ,
mortgage loans, auto loans, insurance and a BlOG with a
wealth of personal credit information. The information
within this website is written by professionals that know
about credit, and what determines ones credit worthiness
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