Bad-Credit Mortgages in St. Paul
The Kris Lindahl Team speaks with potential St. Paul home buyers every day and many of them won’t even apply for a mortgage because they feel their credit is so bad that they’ll never be approved.
What we tell them is the truth: it is possible to get a mortgage with a low credit score (those listed as “fair” or “poor”) from some lenders.
Bad credit home loans, known as “sub-prime” in the mortgage industry, are riskier for the lender or the government if you’re pursuing a government-insured loan, so they will cost more. But obtaining one is not as difficult as you think.
What are Credit Scores?
When mortgage lenders refer to credit scores, they typically mean your FICO score, which is compiled by the Fair Isaac Corporation. Your score is based on information submitted by the big three credit reporting agencies, Equifax, Experian and TransUnion. Scores range from 500 (the worst) to 850 (the best). To be considered a low-risk borrower you’ll need a score of 740 or higher.
If your score is below 699 you are considered a higher credit risk. But, again, this doesn’t mean you won’t be given a loan. In fact, Ellie Mae®, a provider of automated solutions to the mortgage industry, says that 33 percent of closed loans in early 2014 were for folks with credit scores less than 700.
Typical Bad Credit Loan Candidate
The Kris Lindahl Team has relationships with lenders that provide these loans to our buying clients. These partners are the best ones to analyze your credit data and determine if you are a good candidate for one of these sub-prime loans. Use the following as a general guide:
- A credit score of 620 or lower
- Two thirty day late payments over the past year
- One 60-day late payment on a mortgage in the past 12 months.
- Foreclosure or bankruptcy within the past two years.
- A high debt-to-income ratio.
Again, the only way to determine where you stand is by speaking with one of our lending partners. What we can tell you is that we’ve had St. Paul clients with scores in the 500 range get approved for a mortgage.
If you truly want to become a homeowner and you’re convinced you never will because of your credit, you owe it to yourself to contact the Kris Lindahl Team with Kris Lindahl Real Estate. We may just be able to help your realize your dream of homeownership.