Credit Score Below 500?
If your credit score has fallen below 500, obtaining a purchase mortgage or refinance can seem virtually impossible.
There are however, a few lenders known by our eMortgage community that will lend
money to borrowers with credit scores below 500.
For emergencies or urgently required service, contact:
Gerald S. Laufer direct at: 1-631-462-3114
If your mortgage payment history is reasonably good. i.e. "no late payments on your mortgage" or only a "few late payments", interest rates might be available as if your score were above 500.
If your mortgage payment history is not good, there are refinance programs available for credit under 500.
However, because of the lender risk involved, these programs are offered at significantly increased rates and higher closing costs.
For example:
If you are facing foreclosure, one lender program requires a minimum property value of $250,000, charges interest rates in the 10% range; and attaches a hefty pre-payment penalty.
When does such a loan make sense?
In our opinion;
1. If you are trying to save your home.
2. If you are making a purchase well below your financial means and can
realistically afford the payments.
3. If you are refinancing in order to clean up your credit to get your credit
score above 500, can afford the payments, and there is clearly enough equity in
the house to cover the pre-payment penalty on a "step two"/2nd refinance to get
out of that high interest rate within a year or two.
4. If you are getting an exceptionally good deal on a home; need to get into a
home immediately, know that you will be able to repair your credit above 500
within a year or two; and can look forward to a refinance in the near future to
substantially reduce your interest rate, thus bring your monthly payments to a
sensible amount.
There are other lenders that will provide financing for borrowers with credit
scores below 500 under better terms with more preferable rates. However, most
will do so only, if your mortgage payment history is NOT being reported to
credit. Although, at first glance, this seems not to make sense; it actually
may. We run into so many folks with perfect mortgage histories, who've never
been late on their mortgage. These folks have paid their mortgage on time
perfectly for many years; and it shows that way on their credit reports. The
problem is: credit scores below 500 are said to represent only about 1% of the
U.S. population. Thus, underwriters simply turn away.
However, if your score is below 500 and your mortgage payment history has been
good, but your mortgage company does not report to credit, there are a few
lenders that will consider your file. Their conception is that: the absence of
your good mortgage payment history from your credit report, may be the reason
for your low score. In many of these cases, exceptions are made.
If your credit score is below 500; and a reasonable mortgage payment history is
showing on your credit, then you'd probably need to do some work on your
credit. Sometimes there are quick fixes, sometimes repairing credit is a long
and frustrating task. However, knowing what is most important to repair and/or
knowing what is actually able to be repaired, can make the difference between
accomplishing your goals or otherwise frustration, discouragement and/or
failure.
Here are 2 suggestions:
Complete a
contact form
so that an eMortgage credit consultant can make some suggestions specific to
your particular situation. Maybe we can guide you about how to raise your
credit score.
Purchase an inexpensive
eBook from eMortgageSolution.com
that explains how to partially repair your credit, enough to qualify for the
financing you seek.
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