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LESS-THAN-PERFECT CREDIT
There are many "good people" out there with bad credit, who are under the assumption that it takes perfect credit to get a home loan. Perhaps in the past that was true. However, in recent years, more and more loan options have become available. In fact, there has been an explosion of options in the home loan market because of several recent changes in mortgage regulations. It would be wonderful to have perfect credit, but we are all human, and life circumstances can get in the way and adversely affect your credit score. Getting a home loan with bad credit may not always be the easiest or the fastest mortgage loan out there, but you can still own your own home. There are now loan options for just about any situation.
At Bicoastal Lending Group, we will do everything we can to "coach" you, so that you can get your credit in good shape for your home loan. We will work with you on finding the mortgage loan option that's right for you. And yes... you can get a home loan, even if you've had a recent bankruptcy or a foreclosure.
STEPS TOWARD CREDIT RECOVERY
 Step One: Know Your True Credit Score
Are you sure your credit report is accurate? Eighty percent of credit reports have mistakes.
- Get a copy of your credit report
- Verify the items listed on your credit report
- Take steps to repair any negative items on your credit report
- Take steps to remove errors on your credit report
- Monitor your credit regularly
Click here to request a free credit report and consultation from Bicoastal Lending Group.
Step Two: Consider Your Options
You really have two options, once you know what your credit score is. You can get a sub-prime loan and accept that for a while (I call that a "band-aid loan"). You then pay a slightly higher interest rate than you would if your credit was perfect, until you can get back on your feet. At that time you can refinance and get a loan that has more favorable terms for you. Your credit scores will increase by just getting a mortgage and keeping it current.
Or you can wait and try to fix your credit, and bring up your credit score before you buy a home. If your credit history is not that bad, you might want to take some time to bring up your score.
To improve your credit score:
- Pay off as much debt as you can
- Pay your bills regularly and on time
- Don't apply for too much credit
If you absolutely must get into a home now, or it looks like it would take too long to bring up your credit score significantly, we can help you. Just be prepared to pay a slightly higher interest rate.
Step Three: Prepare Yourself with the Facts
Assess your financial situation. Do you have the income to add a mortgage to your debt load? Have you made as many lifestyle changes as possible to reduce your debt? Have you done all you can to bring up your credit score?
If the adverse credit items on your credit report occurred because of some reasons beyond your control -- for instance, illness, job layoff, marital problems or other temporary setbacks -- you must provide a written explanation of your circumstances. This can be provided with the loan application or at some other point in the loan process. If you have had sufficient time to regain financial stability since your problems occurred, and have demonstrated promptness in your payment history, the lender may offer some consideration on the rates.
All in all, we have worked with borrowers who have taken their credit scores from the 500's to the 700's. It is not always an easy process, but it is definitely worth the effort.
Also see the Credit Tips section for 101 ways to improve and maintain your credit rating!
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