YES! You can buy a home- even with bad credit.
Your Credit Report is one of the most relevant items a financial institution will use to determine the risk level of lending you money. Your Credit Report indicates to lenders how well you have paid your creditors in the past and they will use this information to determine the likelihood of any default in your mortgage payments in the future.
Let’s say you know you have some bad credit…The term “bad credit” is an all-encompassing description for missed or late payments, collections, bankruptcies, high balances on numerous accounts or just overall poor repayment habits. These things can happen to anyone for any number of reasons, however, bad credit shouldn’t stop you from doing the things you want to do now.
If you want to know for sure what your options are, speak to a Mortgage Broker who will work with you on getting a pre-approval or council you on the steps you need to take in order to qualify for a mortgage in the near future. If you are trying to get a mortgage with a history of bad credit, below are a couple of examples of what you may expect to hear.
A reliable co-signer
If a lender feels you are too high risk, they may ask you to bring on a reliable co-signer. A strong co-signer assures the lender that if you default on your mortgage payment, they can go to the co-signer to recoup it. We have access to a lender who will allow you to remove a co-signer in as little as 12 months as long as you can support the mortgage on your own.
Higher interest rates
You know what they say, ‘the higher the risk-the higher the rate’. As the majority of mainstream mortgage lenders have a minimum credit score requirement, your Mortgage Broker may take you to an alternate or sub-prime lender. These types of lenders will most often charge higher interest rates for shorter terms, and may even add in an upfront fee. The idea is you will go there for a short term initially, take the necessary steps to improve your credit and then move to a mainstream mortgage lender with competitive mortgage rates.
If a mortgage is not an option for you right now, check out our Bad Credit Boot Camp to take some credit re-building steps in the right direction.
Find out about the whole mortgage process HERE.