Tips of getting a mortgage with low credit score
One of the main factor that the creditor’s lookout for in determining whether you qualify for a mortgage loan is your credit score. When you have a low credit score, you are doomed to not be able to get the loan, which many people wish for. It is assumed that because of your low credit score, you are notorious for not paying your debts on time and thus why should a financial institution award you with a loan that you will not pay. Nevertheless, do not be discouraged this article will come into your rescue delving on the options that you have in case your credit score is not to be looked twice.
Apply for a federal housing administration loans
In case you have a low credit, score applying for a federal housing loan should be your umber one option to consider. However this loan is not for the faint hearted because it has very high interest rates, in addition the loan requires that you pay a total of 10% of the cost of the housing in order to be awarded the loan. Its good side lies with the minimum credit score of 580, which many financial institutions would not even consider for review. While opting for this loan you must consider the interest rate that is charged, which may make you unable to repay but if you have the resources you can take it. The high cost of interest rates charged in this loan is because of your behavior of repaying your debts on time and thus the financial institutions doesn’t trust you and thus can’t trust you with their money.
Apply for sub-prime loans
This is another type of loan where you will be charged extremely high for the loan and in case you fail to repay the loan on time, it attracts a very huge penalty. When you have a very low credit score financial institutions doesn’t have faith in your repaying the loan, that is why they risk their money with you but it will cost you. However when opting for this kind of loans, you need to be aware that some financial institutions might take the advantage of your low credit score to exploit you.
Improve your credit score
In case you find the high interest rates charged in these loans are too high for you, you are left with no option but to improve your credit score up to the acceptable level. You do this with the help of mortgage calculator and by paying your pending debts, paying on time the debts that you are servicing now and reducing the debt load which you are currently servicing. Toronto mortgage broker – Sherwood Mortgage Group This is the sure way of getting a good loan, which is cheaper.