For many first time homebuyers, there is one thing that stands in the way of obtaining mortgage financing over all others. That is the lack of credit or having poor credit. Having a good credit history is one of the most fundamental things to get approved for a mortgage. But what happens if you have not built up your credit history yet or you have had some bad luck in the past?
You’re not alone. This is the case for many people today. In fact, about 34 percent of Americans have FICO scores below what is necessary to get approved for a conventional mortgage. Even the average credit score of 675 is too low to qualify for many conventional loans. What happens to people who want to purchase a home but can’t seem to find a lender who will approve them for a loan?
Government Mortgages Offer Options For Lenders With Little or Poor Credit
Fortunately, government programs such as FHA and VA mortgages, as well as some lenders who specialize in borrowers with poor credit offer loans for just these reasons. But with the exception of government mortgages, those that are available for borrowers with lower credit scores can often be more expensive with higher interest rates to offset the risk to the lender.
FHA loans are issued by lenders and are guaranteed by the FHA. Because of that guarantee, these lenders are more willing to lend to borrowers with less than stellar credit. FHA loans also offer the advantage of lower down payments, lower closing costs and are often easier to qualify for.
VA loans are available for former or active service members and their spouses with as little as zero percent down payments. For borrowers with little or poor credit, the advantage is that VA lenders are required to consider a borrower’s overall financial profile for approval and there are technically no minimum credit score requirements.
Mortgage Brokers Have Access to Many Different Types of Lenders
Working with a skilled mortgage broker in Louisville can help when looking for a lender if you are dealing with a bad or no-credit scenario. They have access to credit unions, lenders and private investors who are more willing to work with buyers with little or poor credit scores. Some of these lenders will instead look at assets, cash reserves, job history and the entire financial picture of an applicant when making their decisions.
Clean Up Your Credit Score
The better your credit score, the better your chances of being approved for a conventional mortgage with a good rate and terms. Improving your credit score is something that anyone looking for a mortgage should consider. But there are mortgage vehicles out there for you if you need mortgage financing now.
At First Savings Bank Louisville, we can advise you on how to clean up your credit score to make you more credit-worthy. We have been entrusted by thousands of clients who need personal and professional service for finding the right mortgage financing in Louisville and throughout Kentucky for their unique needs.
No matter your situation, chances are that we can find the right mortgage financing for you. Call us today at (502) 238-9655 and speak to one of our expert Kentucky mortgage brokers.