Getting a mortgage loan for your home is certainly a big challenge for persons who do not have the right kind of credit score. Hence, the question that comes to the mind of people is whether such persons can ever dream of building a home of their own. The answer is yes and there are many lenders in Oklahoma City and surrounding areas who can build homes of their own in spite of having a not-so-good credit history. But you must know how to go about it because most lenders of repute may not be willing to risk their money on customers that are not able to exhibit the best of credit history. Let us try and find out a few things that could help in finding out ways and means that could make it possible for such people to have a dream home.
Yes Credit Score is Important
There is no doubt that credit score is one of the most important points that are considered when a person is planning to buy a home loan for him or her. Normally, lenders insist on a credit score that is on the upper side of 600 and anything below that is not considered favorable. But there are situations where it might be possible to get mortgage loans even if the credit score is 580. Such persons could be eligible for FHA loans or Federal Housing Administration Loans. These loan schemes were announced in 1934 to overcome the problems associated with the Great Depression. More than 40 million home loan borrowers have availed benefits from these loans and even those who have credit scores of around 550 have been given OKC mortgage loans. However, the margin money could be around 10% for such customers and customers with a credit score of 580 it could continue to be 3.5%. Further, the loans are also insured and therefore the risks of the lenders are covered quite well. It would be pertinent to mention here that FHA loans made up around 15.8% of the overall market and it is a big chunk. It would also be pertinent to mention here that 20% of mortgage loans are for those who have a credit score in the range 600-650.
Be Ready to Pay Larger Down Payment
While 3.5% and 10% down payments are the norms, people with bad credit score would most certainly be required to cough up much more. In most cases, it is around 20% and this also comes with a higher cost in the form of PMI or Private Mortgage Insurance. Even if you have made a large down payment, it would not be a bad idea to have adequate cash reserves in hand. This will add comfort factor as far as lenders are concerned. This is because you may be better equipped to absorb situations that are unwarranted and sudden. It could be personal injuries, accidents or even loss of jobs and income-earning capacities.
Other Repayment Histories
You also must be able to show other repayment histories such as rent payment, mobile bill payment, payment of electricity bills and other utility payments. This will strengthen your case even further.