 708-597-8884 - S.W. |
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It may seem hard to believe but Uncle Sam WANTS you to be a homeowner. Our FHA programs can help even those with only so-so credit qualify to buy a home. |
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Our guiding principle: Envision Mortgage Solutions thrives only on honesty, on honor, on the sacredness of obligations, on faithful dedication to our clients and colleagues, and on unselfish performance. Without them, it cannot live. |
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Envision Mortgage Solutions is an Illinois Residential Mortgage Licensee and a local Chicagoland company to provide personal service: Crestwood Office
4731 Midlothian Tpke #32
[contact us] [directions]Crestwood, IL 60445 [708] 597-8884
Licensed with the Illinois Department of Banks & Real Estate # MB.6759105 and is a member in good standing with the Illinois Association of Mortgage Brokers www.iamb.org, the National Assoc. of Mortgage Brokers, and the Illinois Secretary of State. |
The short answer is yes!
People with less than perfect credit do have options in buying a home. Some wrinkles in your credit history are worse than others but time and maintaining a good on-time payment history can overcome all of them!
Several of the terms of your mortgage will be dependent on your credit history and score. There are several things to consider:
What is your credit score?
Your idea of poor credit and a mortgage lender's concept of poor credit might be different. Some people think that late payments - payments paid after the due date and maybe even incurring a late charge is bad, and it is. However, as long as your payments are received prior to being 30 days past due, then your payment is not actually late for credit reporting purposes. The best thing to do as you ponder whether you are ready to buy a house, is to get a credit report for all three credit bureaus - be sure it includes your credit score - and learn what your credit report says about you. If there are inaccuracies, get them corrected. If you have had a pattern of late payments, get back to and maintain a 100% on time payment history.
Why is your credit score low?
Be critical with yourself. If you are a little disorganized and payment due dates slip past you unnoticed, it's time to get your finances in order. Your lender won't care if your beds are made or that you wash all your windows every week, but they are very hesitant to lend money to people who are casual about keeping up their payments. If your attitude has been "they'll get their money eventually" this will make it a lot more difficult for you to qualify for any kind of loan and when you do qualify, it will cost you a whole lot more!
Interest rates will rise as credit scores fall.
Mortgages aren't only for those with stellar credit of 720 and up. Credit scores range from 350 to 850 but varies a bit by credit bureau...
- Credit scores below 500 simply have to be improved, there are no mortgages in that neighborhood. OK, well maybe with 50% down payment.
- From 500 to 579 you will need to have money for down payment and closing costs, as you would expect more is better.
- Credit scores starting as low as 580 are able to qualify for 100% financing.
- Credit scores from 620 and up find that rates are a little lower and that several points in the qualifying process are easier (although your rate goes up in exchange) .
- With every 20 or so additional credit points, rates ease downward.
- Starting at around 720 additional terms become available and even more relaxed qualifying occurs.
- Even better credit at 740 will have similar standards but are no longer penalized for that leniency.
Just to satisfy your curiosity, even with a credit score of 850, you still have to pay the loan back. Higher credit scores have more and more options.
For example, let's say you are looking at a $200,000 Mortgage with a 30 year fixed rate program. These are not exact rates and they aren't today's rates but they are in the ball park. So here we go:
| Credit Score | Typical Rates | Monthly Payment |
|---|---|---|
| 500 - 579 | 9.5% + (Varies widely) | $1,681.71 |
| 580 - 619 | 8.5% | $1,537.83 |
| 620 - 639 | 7.5% | $1,398.43 |
| 640 - 659 | 6.87% | $1,313.19 |
| 660 - 679 | 6.45% | $1,257.57 |
| 680 - 699 | 6.25% | $1,231.43 |
| 700 - 749 | 6.05% | $1,205.54 |
| 750 - 850 | 5.85% | $1,179.88 |
A person with a 700 score pays $332 less than some one whose score is 600. That's $3,984 more after just the first year. Even the heartiest budget would notice that difference.
Here's another point to consider: A Mortgage is a great thing to add to your credit report.
If you make your mortgage and all of your other payments on time, after one year your credit score could be quite a bit better - maybe even 100 points better - depending on where you started out. Since housing prices rise every year, perhaps it would be worth biting the bullet now, ending up with a vastly improved credit score in a year and contacting your lender for a streamline (aka: low cost) refinance.
Immigrants who have not established credit in the US will have a more difficult time but lenders recognize that no mortgage history is different from a poor one. If this is you, shop around. Just as in many other professions, some people are willing to work harder than others. Be patient and you will find a very nice, very patient and very hard working loan officer willing to put in the time it takes to get you a mortgage.
(Note: Most lenders base their decisions on your middle credit score, or the lower of two if only two scores report.) For more specific information on credit reports and how to improve them to view our credit report section click here.
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