Bad Credit Mortgages

The one thing standing in the way of homeownership for millions of Americans is their credit. But it doesn’t have to.

Many lenders have products for those with credit challenges and Kris Lindahl Real Estate’ Kris Lindahl Team is ready to introduce you to some of them. You’ll need to be able to prove that your income is steady enough to handle a monthly mortgage payment. If that’s you, read on.

Sub-Prime Loans

This is a term you’ve probably heard a lot in the news since the housing market crash. “Sub-prime loans” is a term used to describe loans that are riskier because of the borrower’s poor credit history. They will usually come with a higher interest rate than a traditional loan for borrowers with better credit.

The interest rate is based, in part, on your credit reports but the lender will also consider your past payment history, any late payments, how many delinquent accounts are on your credit reports and how much cash you have for a down payment.

The sub-prime loans that our lending partners have been able to provide to our clients have more reasonable rates than the typical sky-high interest charged for most of these loans.

Credit Scores

If this is your first experience with lenders and mortgages you may be more than a bit confused. Let’s see if we can clear it up for you.

Your credit score, commonly compiled by Fair Isaac Corporation (also known as FICO), is a three digit number from 300 (the lowest) to 850 (the highest). Of course the higher your FICO score, the better you’ll look to a lender.

The analysts at FICO will check your credit reports from the credit reporting agencies, Experian, Trans Union and Equifax. They use a complicated algorithm in performing their calculations, but will eventually come up with your FICO score.

This is the score the lender uses to determine your credit risk.

Candidates for Bad Credit Mortgages

Lenders are the only ones that can truly analyze your credit information with an eye toward granting a loan, but use the following list as a rough guide to what conditions will make you a candidate for a bad credit mortgage.

  • A credit score of 620 or less
  • Two 30-day late mortgage payments within the past year.
  • One 60-day late payment on a mortgage in the preceding 12 months.
  • Foreclosure within the past 24 months.
  • Bankruptcy within the past 24 months.
  • A high debt-to-income ratio.

We’re happy to introduce you to our lender partners and help you down the road to owning your own St. Louis Park home. Please get in touch with us, or fill out the form below.

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