Owning a home is considered the ideal for most people in our country. It’s seen as a mark of maturity, and for that matter it’s simply practical. Everyone needs a place to live, obviously, and most of us would rather own our homes than rent them — and for that matter, homes are excellent investments for the future. But the unfortunate reality is that many people don’t feel that they can buy homes, simply because many can’t get mortgages. Many are denied home loans because of bad decisions in their pasts, or because they simply don’t have extensive credit histories. It can take years to build up a good credit history, and mere months to destroy that history. For that matter, lots of people are starting out life with more debt than they would have in the past, thanks in part to the increasingly common necessity of student loans. Of course, that doesn’t mean that mortgages are impossible for everyone with poor credit scores or a lack of credit history to get. But you might have to look for different types of mortgages. Below, we’ll look into how you can seek out the home loan you need, and how you may want to begin your search for a home loan.
Mortgages: What You Need To Know Ahead Of Time
Firstly, it’s important to know that just because your credit score isn’t the best, doesn’t mean that you can’t secure a home loan — just that the terms of that loan may be different than what they would be if you were a more “optimal” borrower. In fact, 59% of homeowners said that they wished they understood the terms of their mortgages better. This is because you can’t step back from a mortgage — once you make that agreement, you are bound to it. And for those who think they’re getting an amazing deal — it might not be as amazing as they initially thought it was. This is why it’s important to take a step back and assess all of your options before making that final agreement. You should also consider all of the services your lender can offer you before you actually need them. In fact, an estimated 63% of homeowners are delinquent on their mortgage payments and not aware of the fact that their lenders can offer them services that would help them. Being aware of such services — and what one lender can offer versus another — may help you make your final decision.
FHA Loans: What Are They?
Chances are that if you’ve done some research about home loans, you’ve heard of FHA loans, or Federal Housing Administration Loans. These loans aren’t made available to everyone; essentially, these mortgage loans are backed by FHA mortgage insurance, and can only be provided by FHA-approved lenders. If you want to get an FHA loan for a mortgage with a down payment as low as 3.5%, you do need to have a credit of 580 or higher. If your credit score is between 500 and 579, you’ll be requirement to make a payment of at least 10%. This might seem defeating, but if you can make that larger payment, it does give you at least the option of a home loan. Usually, if your credit score is below 500, you’ll be considered ineligible for this type of loan; but the FHA has been known to make exceptions for those with insufficient credit histories, or “nontraditional” credit histories if certain requirements are met. So, it’s worth looking into.
Financing Options: Consider What’s Right For You
No matter what you decide to do, take into account your individual circumstances. Know that, especially if your credit history isn’t the best, you’ll likely have to save up for a larger down payment, which can be the most difficult part of the process. You should also take into consideration the cost of living — things like heating and energy bills, water bills, any HOA fees. And seek professional advice. You can buy a home, you just might have to find a unique path for your individual circumstances.
