Looking for a home loan with a bad credit score can be intimidating and frightening. But it can be done! A little homework and reading this blog should give you all the courage and ammunition you need to forge ahead in your pursuit of homeownership.
First, let’s explain the understanding of “bad credit”. Credit scores, also known as FICO scores, range from 300 (awful) to 850 (perfection). To break it down further:
- 750+ is top tier and qualifies for the best interest rates
- 700-749 is a good score
- 699-650 lenders question whether you’re a risky investment
- 649 and below (according to multiple California Real Estate Brokers, “Your credit stinks”)
So, what is a borrow to do if he/she finds themselves in a less than desirable FICO category? Your first step must be to correct any mistakes you find on the report. (It is interesting to note that 1 in 4 Americans find errors on their credit reports.)
Once any errors have been corrected and your financial standing is still not where it needs to be, there are still options. One such option is a hard money loan. To qualify for this type of loan you must provide proof you can make the proposed mortgage payments, you have a substantial down payment or you have sizable equity in the home you wish to refinance. These are really the 2 main qualifications in this quite-forgiving type of financing.
With general California home values increasing exponentially at this time and low interest rates causing a rush to secure a share in this new gold rush, it makes sense to buy now and take the higher rate a hard money loan might cost you. Since these loans can be made for as short a period as 11 months, it allows the buyer to get into a real estate deal now and refinance at a lower rate once the existing credit issues have been resolved.
Sun Pacific Mortgage has been in the hard money lending business over 3 decades in California. Give us a call at 707-523-2099 to discuss our programs for purchasing or refinancing owner-occupied and investment properties.
Our loans also offer a solution for those borrowers requiring a quick close. The scarcity of property inventory has created a situation in which speed is all important making the timeline from offer to close of escrow a critical component. We have been known to close loans in under a week when the buyer’s dreams are at stake.
Remember that the chance to own your own home might outweigh the additional money in interest payments. So, if you are convinced your credit history is sure to destroy your home-buying dreams, chin up! One call to Sun Pacific Mortgage at 707-523-2099 may open doors you thought were closed to you forever.