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Credit problems often act as a major deterrent in closing a home loan deal. That too a deal which will be preferred by a potential customer? Those with great credit and satisfactory repayment record do not face any problem in getting the home mortgage deal of their desire. But going by the conventional wisdom, those with credit problems are ineligible to access cheap money to buy a house on mortgage and that lenders do not offer them what they want.
But is that really the case? The answer is a definite no. This article aims to dispel serious doubts on this point and show to you as how people with credit problems can avail a loan with zero down payment facility. The information given in this article is especially useful for those who are in the low income bracket. But methods suggested below will make it clear to them that the closing costs of a zero down payment loan will not exceed $1,000. And that will be all; they'll have to spend initially.
If you happen to be someone with a credit score of 575, owning your dream house on the terms and conditions of your choice is certainly not a pipe dream. What it requires is some meticulous planning and its execution in a step by step format as described below:
Qualifying for zero down loan:
1. The first crucial thing you need to do while aspiring for zero down payment loan is to tri-merge your credit score. There are online websites which can undertake this work for you. A tri-merged credit report presents your composite credit profile by collecting information from the 3 major credit reporting companies. You need to check your credit score. Chances are mortgage lenders will use the middle score as the base to consider your application. For instance, if your scores are 550,575 and 600, then the middle point of 575 will be taken up as the base.
2. If 575 is your score, then its time for you to move on and do some leg work. This score entitles you to sign up with a credit repair company ( search yahoo.com for credit repair ) to remove some weeds out of your credit statement so that your credit score can move up by a few notches. A viable option to enhance your credit worthiness is: buy some white goods through credit cards or you can even opt for a new credit card.
3. Now is the turn to collect and compile documents pertaining to recent mortgage or rental deals of past two years. If you had taken the property on rent from a property management company, a complete verification of rent record will be required. You can ask for the form from your mortgage lender or broker.
If the property was taken on a rent from a private party, you will need to compile a record displaying payments through monthly cheques or money order receipts with no payment delays. If you have been paying your landlord through cash, you could be facing some problem here as normally there is no legal document for this mode of payment.
A possible solution here is: get your credit report and look for an active credit line that has been open for at least 24 months. Did this credit line register any activity in the last 6 months or so? If the answer is yes, then move on to the next step.
4. Look at your credit report. Do you have a credit line that has a reporting history of 12 months? If
yes and if you have no more that 2x30 day late payments, then you are entitled to take the next step. .
5. Go through your credit report again and try to figure out if any of your credit lines have a high limit of $3,000. If yes, then time to move forward. .
6. Have a final look at your credit report. You will require one more additional open credit line to appear on your credit report. (Its periodicity and the credit line limit does not matter).
In all likelihood, on the basis of the above-mentioned exercise, you may qualify for a zero down payment loan. The loan program you will qualify for is subject to change and may be laden with some additional clauses without diluting their basic nature.
While making moves to avail a home loan at the basic credit score of 575, you should not forget to ask the mortgage dealer if the property seller is entitled to contribute 6% of the purchase price to the closing costs. This will bring down your own expenses.
Here it is important to know that all those who have been involved in any bankruptcy or foreclosure case for less than 24 months, will not be able to avail a zero cash down payment loan and they will have to make an initial payment of at least 5%.
Greg Andrews is a financial analyst and mortgage broker with over 30 year experience. He specializes in showing people how to pay off their mortgages in the shortest possible time using his unique mortgage reduction system.
For more information please visit: www.bemortgagefreesooner.com (www.bemortgagefreesooner.com )