Buying a house and settling down in life is perhaps one of the most common goals of most people. However, the prices of apartments, condos, and flats can be extremely high in this economy, and it is difficult to purchase a property with a 100% down payment. That is why most people apply for a mortgage loan to purchase the house they desire.
If you have a bad credit score, you might wonder whether there is a chance you could get approved for a loan. The good news is there are mortgages specifically designed for people with poor credit. However, remember that you should only get a mortgage when you can actually afford to pay for it. Consult with a Nord Est hypotheque legale expert to explore your options.
What are “bad credit” mortgages, and how are they different?
“Bad credit” mortgages are not very different from regular mortgages. Still, you usually have to deal with a higher interest rate. People with good credit scores only need to pay 5-10% of the property’s total price as a down payment. But, people with a bad score usually have to pay 20-25%.
This is because the lender will take these steps when you have a bad credit score due to the risk involved. The higher your credit score, the lower your interest rates are, and the more money you can save.
What is the minimum credit score to get a loan approved?
No specific minimum credit score guarantees whether you can get an approved loan. However, the lower your credit score is, the more difficult it will be to find a lender. For private lenders, a 620 credit score is the minimum for consideration, while government entities tend to be more flexible with lower credits.
Most mortgage lenders offer good interest rates for a credit score of 740 or higher.
How to get a mortgage loan with bad credit?
If you have a bad credit score and are facing difficulty finding a lender, you first need to work on your credit card payments to increase the score in the long run. If your spouse has a good credit score, you could jointly apply for a loan, as it increases the chances of being approved.
The best way to get a loan is to apply at the bank with which you have savings and deposit accounts. Since you have been their customer for a long time, they are more likely to make a good offer. Having a substantial amount of assets also helps in scoring a lower interest rate.