Fico Scores
Below 500 - Sometimes bad things happen to good people in unfortunate
circumstances such as medical situations and family emergencys.
During these tough times its not uncommon to have some bills go
unpaid and possibly even missed mortgage payments.
If you do
require a mortgage loan with a credit score under 500, more than
likely you will probably be seeking an equity based lender. Most
good mortgage brokers have access to these sources. With hard
money you can expect to be charged an interest rate anywhere from
5 to 10 points above the prevailing rate. You also will probably
have to pay several points to originate the loan.
There are
different types of equity based lenders, hard money lenders and
portfolio lenders are 2 of them. These types of lenders often
base their lending decisions on the equity contained within the
property versus the individuals credit scores and credit profile.
A hard money lender is usually lends private funds. A Portfolio
lender is another type although hard money lenders can also be
portfolio lenders. Portfolio lenders just means they lend their
own money and usually keep the loan in house instead of selling
the note. Most of the equity based lenders are not score driven
at all therefore they can lend on varioud situations other than
credit problems such as foreign nationals. These types of lenders
can also help with foreclosure bailouts.
Another program available for refinances is the family deed transfer
program. This program is a unique program used for refinances
when you have sub 500 scores. If you have a family member with
good credit you can deed the property to them for 12 months. If
at the These events can have devastating effects on their credit
profile as well and some people find themselves in a position
where their credit scores have fallen below the 500 mark. You
may also want to ask you mortgage broker if they have a Mortgage
Only program. Even though you may have below 500 credit scores,
with a good mortgage payment history you may be able to refinance
and pay off some of the negative debt on your credit report.
Individuals who have a FICO score below 500 will find that most
mortgage companys are unable to help them. All you have to do
is find the right mortgage broker who specializes in helping those
with credit challenges.
Brokers vary in their sources for money to lend and as such the
program guidelines will vary. This means you may be able to get
a better program using someone who specializes in credit problems.
If you find yourself
in this type of situation you will want to hire a good reputable
credit restoration company who can get your credit back in good
standing. There are many companies who offer credit repair services
for relatively low costs in comparison to what your low credit rating
is costing you over time. Make sure the company is referred to you
by someone who has used them in the past. In the end, any dollars
you spend to make significant credit repairs will come back to you
in the dollars you save month to month with your newly improved
scores and available interest rates.
A good mortgage broker can offer advice and may even be willing
to assist you with your credit and trying to improve your credit
scores. There are many different factors involved with credit
scoring that the average consumer is not aware of. By getting
your credit score back over 500, the door will be opened to be
able to use many more lenders than with a credit score below 500.
A good way to start is by getting a copy of your credit report.
Many people have errors on their credit report, and these errors
can have a negative impact on your credit score. By disputing
these erroneous items, you could raise your score back up over
500, which is typically the minimum credit score you'll need to
get a mortgage.
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