How Does Your Credit Score Affect Your Mortgage?
If you’re interested in buying a house, but are concerned about the health of your credit or believe you have a low credit score, don’t be discouraged.
There is no hard-and-fast rule about what constitutes a good or bad credit score for a mortgage. In fact, some people give up before trying to obtain a loan, when in reality, there are several options available.
Here are some steps to take if you’re worried about your credit score for mortgage qualification:
Talk to your lender about non-traditional options
Adjustable-rate loans, longer-term loans, and even HUD or FHA loans may be an option. In some cases, having a co-signer with a strong credit rating can also help secure a loan.
Review your credit history with your lender
Explain the situation as thoroughly as possible, highlighting areas of financial responsibility such as a history of on-time rent or utility payments, cash reserves in the bank, and other positive financial accomplishments. This information is helpful to lenders in distinguishing irresponsibility from unfortunate circumstances.
Ask what you can do to qualify for a lower rate long term
Due to the increased risk involved in extending the home loan, those with a poor credit history may find themselves with higher mortgage payments at first. However, you can continue to find ways to make improvements to your credit score by paying bills on time and saving money. As your credit improves, you can always look into refinancing the loan with a more favorable rate.
Look for lending programs designed specifically for those with lower credit
BBVA offers a wide variety of mortgage loans, including our HOME (Home Ownership Made Easy) program. This community home loan program offers lower credit score requirements and other benefits for people with challenged credit.
Want to discuss your mortgage options based on your current credit score? Contact a BBVA Mortgage Specialist today!
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