Banker asked:


went bad? Think about it, a person who trades in a car worth $4500 or less and then is forced to buy a new car. Now if they could only afford a car worth $4500 today, how are they going to afford the payments and insurance on a new car tomorrow? A few maybe, but how many people got into risky loans, loans they could not afford, just like the home mortgage mess, because it sounded like the government was almost giving you a car. Do you think a portion of these loans are risky and will go bad, just like the home mortgage loans?

Tara

Carrie Reeder asked:




When applying for a mortgage loan, your credit score plays a huge role. Thus, many people choose to establish a good credit history before applying for a mortgage. Having a low credit score will not necessarily prevent you from getting a mortgage. Likewise, it’s possible to get a mortgage with no credit history. Before applying for a no FICO score home loan, it is important to understand how these loans work, and how to qualify.

Purpose of Credit Scoring

Without credit reports and credit scoring, potential lenders would be unable to assess an applicant’s creditworthiness. Credit reports contain very detailed information about our credit history. For example, the length of credit history, number of credit accounts, outstanding balances, etc. Along with creditor information, reports also contain a three digit number. This is the FICO score. Credit scores range from 300 to 850. Higher scores obviously means better credit.

How Credit Scores Affect Mortgage Loan Approvals

Years ago, obtaining a mortgage loan with poor credit was rare. However, lenders have begun offering flexible programs, which make it possible for more families to qualify for home loans. Among these includes a variety of mortgage loans especially for people with bad credit.

Bad credit generally consists of several late payments, bankruptcies, foreclosures, collections, judgments, etc. All of these factors contribute to very low credit scores. Low credit scores equal higher interest rates, which will increase mortgage payments. Fortunately, there are loan programs in which FICO scores are not a primary factor.

What are No Credit Score Home Loans?

If you have bad credit or no credit history, you may qualify for a no credit score home loan. In many instances, homebuyers earn a sizeable income, in which they can afford to buy a home. However, because of past credit history, many will not qualify for a conventional home loan. Rather than wait until credit improves, these individuals may apply for loans without using credit scores.

Try using one of ABC Loan Guide’s
Recommended Poor Credit Mortgage Loan Companies.

Many mortgage lenders offer these sorts of loans. However, homebuyers must meet certain criteria. For example, most lenders will only finance 70% or 80% on a no credit score loan, thus the homebuyer must have a down payment of approximately 20% – 30%. Secondly, most lenders require full documentation on these loans. Thus, homebuyers needing a no doc or stated income loan may not qualify.

Angela

John L asked:


A significant number of people that don’t qualify for traditional home loans accept subprime loans to get into a home of their own, often without understanding that their mortgage will jump dramatically.

Lenders, on the otherhand, are making loans to people that can barley make the starting mortgage and will find it almost impossible to make the payment once the mortgage increases.

Many people got into these loans with the expectation that the value of their home would increase and they could refinance, but in the current cool market it’s nearly impossible to refinance.

Again, who’s to blame? A person for taking the loan they can’t afford or the lender that knows that the family will probably lose the house?

Sylvia