There is a home out there for everyone. There is also financing for every buyer out there now thanks to flexible credit mortgage lenders.
The Great Recession of 2008 hurt so many people in the United States. As many as 26 percent of all of Americans have poor credit scores of 600 or worse as a result of the recession.
With several American markets exceeding recovery levels of operation, many lenders are finding confidence again to lend to those who have less than ideal credit.
Read on to see how bad credit mortgage lenders are making homeownership tenable for so many impacted by the recession.
One of the primary tools these lenders use is the Federal Housing Administration (FHA) loan. These are loans that are backed by the federal government against default. This makes for a handy tool for lenders when working with people who have experienced credit hardship.
FHA loans were created by Congress in 1934 during the Great Depression, the worst economic downturn in the history of the country. The FHA helps protect lenders who originate loans to certain people with recovering credit by providing insurance on those loans.
FHA Loan Search, as the name suggests, has a certain specialty for these loans. Click here for our insights on these loans.
FHA loans require borrowers to have a minimum credit score of 500. That’s the minimum to qualify for the program but what credit scores do you really have to have to qualify for a mortgage?
From there, the interest rate for the loan and the down payment vary depending on your credit score. For those who have a 580 credit score or less are required to have a 10 percent down payment, or more. Those with higher than 580 credit score can have a down payment as low as 3.5 percent.
From there, income requirements are treated on an individual basis. But as a rule, most lenders won’t want a mortgage payment to be any more than 29 percent of gross income for a household.
Other core requirements for borrowers require them to be authorized residents, have a Social Security Number and be a legal adult.
Even if renting is cheaper than having a mortgage for the loan you want, renting doesn’t allow for wealth accrual. When you pay rent each month, your money goes into a landlord’s account and doesn’t help you build equity on an asset like a house.
However, with the help of bad credit mortgage lenders, you can improve your credit and build equity in an investment like a home. This means that you will have an investment that will bring a return, especially if you make a smart buy in a good neighborhood.
From there, you can begin to improve other aspects of your life as you improve your credit and financial situation. Who knows! Maybe in the future you’ll have investment properties that you use for income that comes from tenants who pay YOU rent each month. It’s all within reach.
To get started with your dream of homeownership, click here now.