Arlington low-income home loans

Need a Bad Credit Home Loan in Arlington?

Many people seeking Arlington home loans wonder whether their bad credit will shut the door to home ownership. Luckily for them, there are lenders willing to advance the home loans to those with less than stellar credit scores.

Credit scores indicate the likelihood that the consumer will repay a loan. They are on a scale ranging from 350 to 850. Although the definition of what constitutes good or bad credit differs from one lender to another, the scores are usually summarized in bands to form a descriptive scoreboard like the following:

781 – 850 Excellent661 – 780 Good601 – 660 Fair501 – 600 Poor350 – 500 BadThe excellent and very good categories represent the best consumers because they represent the lowest possibility of default. As such, they enjoy the lowest interest rates and down payments. Scores below 600 are considered unattractive as they represent a higher than normal risk of default.

If your score is not within the top two ranges, do not be discouraged. You can still qualify for an Arlington home loan by proactively pursuing available possibilities. You will improve your chances tremendously by undertaking the following steps:

Explore available options

There are two home loan options: conventional and government-assisted. Housing Administration (FHA) loans, which are offered at a number of financial institutions, may be your best option because qualification for them is less stringent. For example, a minimum score of only 580 is required and the lowest down payment is 3.5%. Grant programs are also available in case you are cash-starved. However, you may have to institute mortgage insurance for the term of the loan.

Save for your down payment

The standard rate for conventional home loans is 20%. The down payment has the effect of reducing the default risk. Since you are already viewed as high risk, a larger-than-minimum down payment will certainly stand you in good stead with your lender. Additionally, you will save on interest and reduce the insurance amount or eliminate it altogether.

Build your savings account

Financial emergencies may arise in the currency of your loan. Your lender will want to see that you will still be able to handle such contingencies as they arise without resorting to defaulting on your home loan. Savings equivalent to about six months’ income should be convincing enough.

Apply at you financial institution

If you have built a good and long-term relationship with bank, that should count for something. Explain yourself concisely and present compelling documentation regarding your low score. Your aim should be to convincingly explain what you have done about it and why what caused your score to dip is unlikely to recur in future.

Shop around

Rates for Arlington bad credit home loans vary. Even with a below-par score you can still find deals that are better than others. For example, brokers may seek to increase their profit by artfully introducing hidden costs to your loan. Avoiding them or being extra vigilant may save you quite a bit of money.

There is a possibility that even with all this effort you will not be successful in your quest. Do not give up. It is only that you have not got what was intended for now. This does not in any way mean that you won’t get it in future. What matters most now is taking corrective steps going forward. So get down immediately to steadily raising your credit score so that next time your Arlington home loan application will sail through without turbulence.