Conventional wisdom dictates that mortgage loan programs are only available to those with perfect credit scores or those who can afford big collaterals. This drives many to avoid applying altogether. At Midland Mortgage, we want to help potential homeowners to become aware of the mortgage loan programs designed specifically with them in mind.
Here are some mortgage loan program details you need to know:
The Federal Housing Commission (FHA) has a program specifically designed to help "high risk" applicants who wouldn't typically qualify for a mortgage. Private lenders issue these loans, but the FHA insures them, which means if you default on your payments, the Agency will cover some of the losses.
There are many types of FHA loans, as they have special programs aimed at condo buyers, senior citizens, or those who expect their income to increase in the coming five years (graduate programs).
Through private mortgage loan programs, your application goes through software that analyzes cold numbers and determines whether the loan should be approved. However, many financial institutions allow customers to apply for manual underwriting as well.
This provides a chance to bring in additional documentation to compensate for a low credit score. Utility bills and rent payments are often the most effective, especially if you have paid your rent on time for 12 consecutive months. Offering a down payment above 20% can also help as does proving there won't be a large difference between your current rent payments and your monthly installments.
If you have a low credit score, you will likely be looking at higher than average interest rates. In the case of those applying for an FHA mortgage, there is also a mortgage insurance premium involved, which may raise monthly installments.
The truth is there are many options out there for people committed to purchasing their dream home. Let our team of experts at Midland Mortgage help you find the best mortgage loan program for you. Contact us now and take the first step to home ownership.