Bad Credit Mortgage?

Question

I don't have terrible credit, but it's not spotless. We've been late on two credit card payments (my husband didn't get paid for two months). If we want to buy a house in 1-2 years, will that be enough to keep us from getting a mortgage? How bad does your credit have to be to have to get a "bad credit mortgage"?

Answer 1

One or two years from now, one missed payment on a couple cards won't send you into 20% interest rates. We are also assuming those cards prior to the missed payment was up to date and you don't miss any payment for the next year or two. These can be explained that your husband didn't get paid from work. What that explination will send up red flags if you looked for a mortgage now. Missing one payment on a couple cards after not getting paid for two months will point out to the lender that you do not have sufficient savings to cover a bump in the road. They will see this on the mortgage application anyway. Most reputable agencies will ask or require you have a 6-month savings buffer. After what happened to you, they may insist on it and refuse your application until you have sufficient savings. They are just protecting themselves from you defaulting on the mortgage and foreclosure.

Even if your score comes in really low, as long as your front and back ratios come in good, the bad credit score will just disqualify you from prime lenders and the lowest interest rates. You would, however, qualify for sub-prime lenders which may not carry PMI charges, but will charge a few points higher. You may still qualify for a piggy back loan which is your mortgage is partially funded by a prime lender and a sub-prime lender. Piggy backs may eliminate PMI but part of your sub-prime loan will still come at a higher interest rate.

Your number one problem isn't the missed payments, your number one problem is your lack of savings. Save enough for you two to live on for 6 months with no income and then everything above that, use that for a down payment. Even if in two years that "extra" savings doesn't equal a 20% down payment, you'll still qualify for a large number and various types of loans if your credit score and ratios are good enough.

Answer 2

Having been involved full time in the mortgage industry for 12 years, the most important and primary factor when shopping for a home loan is your credit score. If your score is 620 or above many lenders can offer you fairly decent loan terms, if you are above 680 - 850 any bank will do your loan, if between 500 - 619 credit score normally the rate will be 2-3% higher than a good loan along with a 2 to 3 year prepayment penalty. If you are below 500 then your only option is a hard money loan (this is a bad credit mortgage to the fullest) which normally requires a minimum of 30% down payment and really does not care how bad your credit is. The other solution as long as your income and employment history is sufficient (over 2 years employment) you can possibly qualify for an FHA government loan where the credit score does not have much priority and you can purchase a home w/3% down or have the down payment gifted from a family member (this is the best homeownership program to purchase your first home). Otherwise there are plenty of 100% financing lenders out there and can finance your deal with a minimum of 620 score wheter or not you can prove your income, if you can prove your income easily you only need a 560 score to purchase the home with no money down. The wise solution is to repair your credit 6 months to a year before purchasing a home, check out www.lexingtonlaw.com, a company of paralegals and attorneys who can repair your credit without any documentation from you except for a 3 merge credit report. Another solution is Ecredit.
In regards to your credit card lates they will not hinder you if only a couple of 30 day lates and normally lenders do not pay attention to these if they are older than 24 months, mortgage lates, foreclosures and a bankrupcy less than 4 years on the other hand are the worst derogatory type of credit if you're shopping for a loan. In summary, the best solution is to enhance your credit before purchasing your home.

Answer 3

Lenders will look at your overall credit profile. They also have credit score requirements. If you want to do 100% financing, you need a 580 credit score. With a 500 credit score, you need at least a 10% down payment.

Your credit profile is only one element in qualifying for a mortgage. A mortgage is a measurement of risk. Lenders look at your credit profile, employment, income, assets, down payment, etc.

If you are looking 1-2 years down the road, here are a couple of tips to help put you in the best situation possible. First, pay down credit cards as much as possible. Try to get the balance down to one third of your credit limit. A large part of your credit score is based upon these ratios. Second, do not close out any accounts. Even if you pay off a credit card, keep it open. Closing credit lines will lower your credit score. Third, if you pay rent, pay by check. This will keep a record to verify that you have a history of housing payments.

I hope this helps and good luck.

Answer 4

Hi!

Do you have collections? Charge off? Car repo's? 60 ir 90 day lates on your mortgage? Consist late payments on your house? Almost is forclosure? Owe almost 100% of the balance on every credit card you own?

Those ways above will get you a "bad credit mortgage".

I am a mortgage loan consultant. I can give you a free no obligation prequalification on how much you can qualify up to. I am a loan consultant in ohio. Been in the business 3 years and of course licensed by the state. I can do government loans for first time homebuyers with really low fixed rates and 100% financing. I can also do 100% financing on conventional loans and non conforming. Ask a realtor about seller consessions too, you can use up to 6% seller connsessions on our programs as well.

Call me for a free no obligation quote on how much you can afford and rate. 888-526-5001 ext 772 toll free or if you are local to ohio reach me direct at 440-832-7772. Thank You for your time and good luck! Lindsey!!!

*UNITED STATES ONLY*

Answer 5

If it was only two credit card payments you shouldn't have a problem with a mortgage especially if you've made on time payments the rest of the time. It usually only gets reported to the credit agencies if you were more that 30 days late. You may or may not be asked you explain them.

Answer 6

Well in 1-2 years you should be able to fix your credit situation to that you have excellent credit. What is preventing you from trying to get into a home now. Currently it is a buyers market and you may be able to take advantage of some great opportunities. I would suggest you log onto http://www.justgetaloan.net work with some of the loan calculators to see about your personal situation. Feel free to contact me for further assistance at 866 530 7300 ext 7305 or by email at [e-mail]

Answer 7

This is easy to answer through a few articles I wrote on this subject. There are multiple opportunities for people with bad credit but you can also improve the scores within a week with a bit of guidance.

Here is some additional info. Hope this helps.

Answer 8

Being late twice is still pretty good credit. It would have you above 700.

Answer 9

Sounds weird

Answer 10

if your credit score is 560 or higher u will get a laon for house