Nobody’s Perfect: Mortgages for Less Than Perfect Credit
Let’s face it - nobody’s perfect. This can be especially true when it comes to a person’s credit history. Yet many people are under the misconception that it takes a perfect credit history to obtain a home loan. While good credit is an important part of the approval process, a period of late payments or collection accounts doesn’t always spell doom.
Lenders will often look for extenuating circumstances to explain payment or collection problems. Loss of employment or an illness demonstrates that the financial difficulties were beyond the borrower’s control and are not likely to occur again. However, overextended credit can also lead to late payments, and that it within the borrower’s control. In such cases, the lender will look for an excellent payment history in the twelve months preceding the loan application.
A common misconception among individuals who have filed for bankruptcy is that they must wait 7 years to qualify for a home loan. This is certainly not true. A person filing for a Chapter 7 bankruptcy may qualify in as little as 2 years after the discharge date. We have access to proprietary loan programs with shorter time periods as well. For some government insured loans, a person who has been paying on a Chapter 13 bankruptcy for 12 months may qualify for a loan while still in bankruptcy if given permission from the Court.
Long Credit History
Some potential home buyers believe that they have to have a long credit history to qualify but a person with little or no credit history is a prime candidate for a home loan. A lender is able to use utility bills and rent receipts and an acceptable source of credit history. Lenders recognize the financial restraint exercised by persons who pay cash for most items.
The biggest mistake a potential home buyer can make is to ignore outstanding credit delinquencies or disputed items on a credit report. NOVA's loan officers can make available to you a dedicated Credit Services team that can offer guidance on how to correct or rebuild a good credit standing. It’s important to not try to do this yourself! With all of the factors that go into a credit score, changing one item may adversely affect your score in other area. Our Credit Services team isn’t “credit repair” – they don’t charge you a fee. They will work with the credit repositories to identify ways to legitimately raise your credit scores. For some, this will mean that they qualify for the loan. For those who already qualify, we can show you how to raise your score so that you may qualify for a lower interest rate or reduced private mortgage insurance or homeowner’s insurance rates.
NOVA's licensed and professional loan officers can help determine your qualifications and work with you to strengthen your credit profile, usually with just a phone call. Don’t wait, make the call today!