Bad Credit Mortgages

It’s a pity that so many would-be Bloomington homeowners feel that a bad credit rating prohibits them from owning a home. It is simply not the case.

A great many lenders offer loan products to those with less-than-perfect credit and the members of the Kris Lindahl Team with Kris Lindahl Real Estate would like to introduce you to some of them.

If you have a steady, verifiable income that allows you to manage a monthly mortgage payment, you may just be able to buy into the American Dream of home ownership. Read on to learn more.

Sub-Prime Loans

For a time, during the recession, the term “sub-prime loans” became almost a household word. It was in the news daily, describing part of the reason for the housing market meltdown.

Sub-prime loans are, simply, loans made to borrowers that are considered riskier than others because of credit problems. These loans typically – but not always – carry a hefty interest rate.

This rate is based in part on the borrower’s credit history but lenders also consider past payment history, late payments, delinquent accounts and the amount of money you have for the down payment.

The Kris Lindahl Team includes lending partners who have a history of finding loans with reasonable rates for our sub-prime borrower clients.

Credit Scores

So just where does the lender find your credit score? Let’s take a look at the process.

The Fair Isaac Corporation (FICO for short) is the most common source of credit scores for mortgage lenders. The score is a three digit number from 300 to 850, with the latter being ideal. The higher your score, the less of a risk you are, at least according to lenders.

FICO determines your score after poring over your credit reports from the “Big Three” credit reporting agencies, Trans Union, Experian and Equifax. They then use a complicated formula to perform the calculations necessary to determine your FICO score.

Candidates for Bad Credit Mortgages

While it is up to each individual lender who they consider a good candidate for a sub-prime loan, use the following list to determine some of the conditions considered when deciding who does and does not make a good candidate.

  • A credit score of 620 or lower.
  • Two 30-day late mortgage payments within the past year.
  • One 60-day late payment on a mortgage in the preceding 12 months.
  • Foreclosure within the past 24 months.
  • Bankruptcy within the past 24 months.
  • A high debt-to-income ratio.

We’re happy to introduce you to our lender partners and help you down the road to owning your own Bloomington home. Please get in touch with us, or fill out the form below.

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