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Can I Get A Mortgage for Lakefront Property In Ohio if I Have A Low Credit Score?
Can I Get A Mortgage for Lakefront Property in Ohio if I Have A Low Credit Score?
As a home buyer, one of the things you may be worried about is your credit score. Maybe you have student loans you're still paying off, or there's a few missed payments in your history. Don't lose hope however. If you have your eye on lakefront property in Ohio, you may still be approved for a mortgage, even if you credit score isn't stellar. We have some insights for you to be able to determine whether you can get a mortgage.
Paying Higher Interest Rates
Interest rates have remained historically low, despite the volatility in the housing market. With a lower credit score, you can't count on getting those low rates. The fact is, that mortgage interest rates vary with the buyer, depending on the risk. In other words, if your credit is damaged, you can still qualify for a loan, just at a higher interest rate. If you have your heart set on buying, then you have to decide whether a higher interest rate is something you will be comfortable with.
FHA Loans
FHA loans were created by the Federal Housing Administration in 1934 to increase home ownership during the Great Depression. They have been utilized by more than 40 million families to purchase or refinance homes. The loans are insured, so lenders have greatly reduced risk. In 2017, FHA loans made up 20% of all new loan originations. These loans are designed to act as 'helper loans' for those buyers who earn enough to pay a mortgage monthly, but don't have long term credit history to show they are low risk candidates. If this is the situation you are in, you could well be approved for an FHA loan, and you might even pay a smaller down payment than if it was a conventional loan.
Show An Improvement In Your Score
Your credit score is not a hard and fast number that will never change. Nor is the same credit score for two different people viewed in the same way. For example, Individual A might have a low score that has not changed in years, or they are missing payments in their most recent history. Individual B is someone with the exact same credit score and hasn't missed a payment in 3 years, plus their credit has steadily gone up. A lender will view Individual B as a much better prospect.
Lakefront property in Ohio is extremely desirable. If you really want a shot at getting approved for a mortgage for your dream waterfront home, then here are a few extra tips you can use:
- Make a larger down payment. A bigger down payment reduces the lender's risk, as they have a buffer. A good down payment amount is 20%.
- Along with a large down payment, it helps if you have cash reserves, which will make the lender feel comfortable that you will be able to take care of unexpected expenses.
- Show consistent rent history. If you can prove that you've paid your rent on time for the past 12 to 24 months, then that is a point in your favor.
So you see that a low credit score doesn't mean that you will never be approved for the lakefront property in Ohio that you want. It is possible, with just a little more effort on your part.
Our expert agents at Choice Properties can help you find the right plan when improving credit score. Give us a call today!