Recommended Buying Options For People with No Credit
"Imagine settling into the dream home YOU choose and then working to buy it..."
What options do you have in getting approved for a mortgage with a low FICO? Can it really be done? Is financing you home loans in this way really worth it?
What makes buying a home with poor credit so difficult?
A home loan refers to the money the home buyer must borrow from a bank or a home finance institution to purchase a piece of real estate, generally secured by a registered mortgage to the bank over the property being purchased.
With really poor credit you may be turned down for a mortgage as you are considered a risky case. Although bad score situations are risky, not all lenders consider it so, some even specialize in such programs. Give yourself a deserved reprieve from your debts to get your finances in order during times of despair. Don't hold back your dreams due to a poor credit situation as there are a variety of loan sources and non traditional banks that can be found with a little searching.
It is very important for new home loan borrowers to become familiar with certain common terms you will encounter when applying for financing with low scores. Be an informed consumer and understand the home loan obligation you are signing on to. Make sure you are familiar with these terms before you start scouting for a suitable home loan product to fit your needs.
Principal: The total amount of debt, the principle excludes interest and late charges remaining on a loan.
Refinance: Paying off your existing home loans with the proceeds from a new loan.
Variable rate loan: The interest rate on these loans fluctuates in response to changing market conditions. As the interest rate fluctuates, your monthly payments will be adjusted up or down depending upon your agreed upon terms.
LTV/LCR: LTV is an acronym for the loan to-value ratio while LCR stands for the loan-to-cost ratio. Both are terms used by various home loan lenders to determine the loan amount that a person is eligible for based upon the total cost of the property you intend to purchase.
Appraisal: A written analysis of the estimated value of the real estate prepared by a qualified appraiser.
Prepayment: Repaying the home loan before the agreed date the loan was due. Be aware some programs can have a penalty for prepayment.
Penalties: Mortgages can contain numerous penalties like the above mentioned prepayment penalty, late payment fees, check bounce penalties, there are many. Loans can have even more than usual to offset the increased risk. You can reference HUD online learning resource for more information: Mortgage assistance (HUD). Take the time to read the terms of the low FICO home financing and don't be afraid to ask for clarification of any item you are not sure on. Be aware and understand the mortgage documents to know all the fees and penalties.
Sales deed: The sale deed transfers the ownership of the property in exchange for a price paid or considered. This document is required to be registered but in most cases the title company will take care of this.
Be careful with the terms and conditions of your selected lender. Do not be intimidated, read it thoroughly before signing the home loan agreement. Don't be bullied because of your credit score, there are loans designed for your credit situation and remember they are getting your business. You are in the drivers seat. Clarify anything that does not make sense or does not look right, trust your instincts and choose the right home loans for people with bad credit terms with confidence.