How can I get a first-time home buyer’s mortgage if I have bad credit?
Matrix Mortgage Global – How can I get a first-time home buyer’s mortgage if I have bad credit?
Purchasing your first home can be an exciting time, but sometimes getting a first-time home buyer’s mortgage turns out to be more complicated than you thought it would be. This is especially true if your credit is less than stellar. So, is it even possible to get a mortgage if you’ve got bad credit? Fortunately, it is! There are many options available to you and your mortgage broker can help you weigh the pros and cons of each and help you determine which option works best for you.
The following are some options for getting a first-time home buyer’s mortgage when you don’t have great credit.
Traditional lenders such as banks and credit unions are heavily regulated which means that they can usually only provide loans to those with good credit. Alternative lenders on the other hand have more freedom to look at the big picture and are more likely to overlook the fact that someone has a low credit score. Keep in mind however that these lenders are taking a bigger risk and therefore are going to charge higher interest rates. If, however you can handle these payments for a short term, you can use a mortgage from an alternative lender to build up your credit score so that you can eventually qualify for a mortgage from a traditional lender.
Private lenders are individuals (in many cases friends or family members) who invest in a mortgage loan. Again, these lenders are not bound by the same restrictions as the banks, so that fact that you have poor credit is less of a factor.
Borrowing money from loved ones however can be challenging. Before you sign a private mortgage with a friend or family member, it is important to consider how doing so will affect your relationship. If you prefer to sign a private mortgage with a stranger, discuss this with your mortgage broker as they may have clients who are looking to invest.
A third option for those with bad credit who are looking to get a first-time home buyer’s mortgage is rent to own. This is an agreement with a landlord that you will rent a home for a set period of time with the option to purchase the home for a set amount at the end of that timeframe. While you are renting, a portion of your payments are set aside for a down payment. This timeframe allows you to rebuild your credit as well as save for a down payment.
As you can see, having bad credit does not have to stop you from owning a home. If you would like to discuss any of these options with a mortgage professional, give us a call today.
At Matrix Mortgage Global, we can help you get started on this path. Call us today at 1-877-371-5293.