Mortgage with very low credit score

Guest

I have a very low credit score but approximately $100,000 to use as down payment on a home that I would like to offer $172,500. Is that possible to get a loan with score of 500 or a little less.

Thank you.

Jeanne Stark

thewretched02 · Joined: 23 Jun 2009 Posts: 115 23.90 Dollars($)

Hi Jeanne,

that would probably depend on your income. If you are only having to finance around 70K of debt and have a decent enough income to manage the payments well, you should be ok I think.

From a lenders perspective, if you have 100K equity in the property, their interest is more or less guaranteed as it would be unlikely that the house would drop in value by more than 100K. Thus, if you default in your payments, they can safely sell the house to recover their loan.

With that much equity I think that unless you have some very damning skeletons in your closet you should be ok. May have to look around a bit though until you find a lender willing to look past the credit score.

jameshogg · Posted: Tue Oct 20, 2009 7:40 pm Post subject:

Hi jeannestark,

With a credit score of less than 500 it would be difficult for you to qualify as a loan. Though you can pay a downpayment of $100,000, lenders will not be ready to give you a loan because of your bad credit score. You will have to improve your credit score first and then look out for loans. You can check out the given page to know some steps to improve your credit score:
http://www.mortgagefit.com/credit-rating/credit-repair.html

Thanks

jveenstra · Posted: Wed Oct 21, 2009 9:43 am Post subject: Credit Score

With a credit score that low it is unlikely you will be able to find what you would consider to be a "normal" mortgage.

There are probably two avenues you can approach:

1. Seller financing: Is the seller willing to hold a mortgage of $70,000. The seller can hold the mortgage and collect payments from you either for the term of the mortgage or until your credit improves over time and you can refinance to a normal mortgage or the seller could sell the mortgage he is holding at a discount to someone who buys private mortgages. You may have to have paid on time for 12 months or longer before the seller could do that.

2. With that size of a down payment, you can probably find a hard money lender. That means the interest rate will be higher than normal, but, you get the property and when credit scores rise enough over time you refinance and get out of the hard money mortgage.

thewretched02 · Joined: 21 Oct 2009 Posts: 18 3.29 Dollars($)

there are plenty of loan respurces online - do some looking around and i'm sure you can find a good option.

Guest

Jeanne Stark - I just went through the same thing. It drove me crazy and before giving up a friend of mine recomended BoostMyScore.Net
They raised my credit score in two days from a 520 to a 720! They have a perfect track record with the BBB and were awesome and easy to work with! I now have a loan approval for the house of my dreams! Give these guys a try! Good Luck!

tfaulhaber · Joined: 14 Sep 2009 Posts: 9 2.38 Dollars($)

There is no minimum credit score for FHA loans. Credit score requirements differ from Lender to lender depending on who their end investor is. We fund and service our loans. Our minimum credit score is 550. First Guranty and Mid Island will entertain a 500 credit score with compensating factors.

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1737 36.13 Dollars($)

Who said sao?

FHA requires a minimum of 620 score

tfaulhaber · Joined: 14 Sep 2009 Posts: 9 2.38 Dollars($)

FHA does NOT require a minmum score of 620. Who ever your investor is set that as the minumum score that they will accept. If you work for a bank, your bank made the decision to only accept a 620 or higher credit score. FHA doesn't have a minimum requirement. In the future, a minimum requirement might be set but, as of 10/23/2009 there isn't one.

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1737 36.13 Dollars($)

FHA guidlines clearly says that minimum required sacore is 620

Posted: Fri Oct 23, 2009 11:00 pm Post subject:

sacore??? What's that?

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