It is sad how mere numbers can substantially determine the course of your life from your GPA that determines whether or not you make it to your dream college, to that bad credit score that can effectively hamper your ability to buy your dream house. Due to the emotional and financial investment that is associated with the property you call your home, it can easily be classified as one of the most important assets that you own. Similarly, when a bad credit score gets in the way of owning such an important asset, it can be devastating and leave you feeling helpless. However, not all hope is lost even if you have a bad credit score. There are still ways that can help you improve your chances to land a loan for buying a house.
Below are some of the ways you can do that.
Offer a Larger Down Payment
If you have a credit score that is below 580, offering to pay a larger down payment is an option that can help you get the keys to your dream house. Therefore, offering to pay a down payment that is at least 20% or even higher percentage of the total price can compensate for your poor credit score to quite an extent. Offering to pay a large down payment up front effectively conveys your ability to afford the loan despite poor credit history. Besides, the lender will know that you have a sizeable stake in the home and will be less likely to default despite your poor credit score.
FHA loans may entail higher fees, but the terms and conditions to qualify for these loans are much less stringent and are backed by the Federal Housing Administration. They provide affordable financial services to moderate and low-income borrowers. Even borrowers with credit scores as low as 580 can acquire home loans as they are able to pay 3.5% of the amount upfront.
Know What to Emphasize To a Lender
Things such as proofs of on-time rent payments for the past 12 months or more, or cash reserves for the last six months, a high disposable income, and low debt payments can all help improve your standing in the eyes of the lender. The idea is to demonstrate financial stability which will help the lender decide in your favor despite your bad credit score. Although there are automated computer programs that are sifting through loan applications and deciding your fate based on an algorithm in the first step, when it comes to the manual under-writing phase, it can be your time to shine and emphasize the aforementioned things to tilt the decision in your favor.
All in all, there is still a chance to land a house loan for your dream house despite a bad credit score if you offer to pay a large down payment, know what to emphasize to your lender, or by going for a Federal Housing Administration-backed loan. When you have finally acquired a loan and are looking to buy a house anywhere in Orlando, Florida, be sure to obtain our dedicated services to make the process seamless for yourself.