How Can I Afford a Mortgage With Bad Credit?

Bad credit should not preclude you from getting a mortgage. There are options for you even with a low credit score. However, before you start searching, take the time and put forth the effort to correct the bad habits that lowered your score in the first place. That includes consolidating your debts, making your payments on time for at least six months, and living within your means. Then you must be realistic about what you can really afford. A generally-recognized rule of thumb is to have a debt-to-income ratio at no more than 43%.Your ability to get a loan will hinge on your job, a dependable source of income. Once you have the above in place, proceed with the following steps.

Request your credit report

Check to make sure that it contains no errors. If it does, correct even the smallest mistake. Doing so will raise your score and save you money on interest payments.

Get your records together

You must account for all income and financial holdings in detail. Again, having a steady source of income is essential.

Be prudent

Make sure you can afford the payments before making the commitment to a mortgage.

Persist until you find the best option

Don’t let embarrassment over your bad credit prevent you from asking as many professionals you have to for the best deal. Being intrepid and smart will improve your credit.

Find the best broker you can

Educate yourself about the specifics about mortgages and shop around. To a limited extent you can play one broker off against another to get the best terms. Otherwise you’ll end up with high interest and prepayment penalties.

Get a mortgage broker you can trust

Check reputations of brokers among friends and business associates. It may also be possible to verify a company’s quality on threads online, as long as they are not sponsored posts.

If you follow the above instructions, you most certainly can afford a mortgage, even with bad credit, and improve your financial picture.

*Affects pricing. With the No Closing Cost Option, borrowers finance the closing costs instead of paying for them at closing. Borrowers who pay closing costs at closing may qualify for a lower interest rate. Some upfront fees (ex. credit report and appraisal) may apply and may be credited at closing.

*Refinancing or taking out a home equity loan or line of credit may increase the total number of monthly payments and the total amount paid when compared to your current situation.