How do you get a mortgage when you have so/so credit and no down payment?
Answers:
let me just caution that a little patience may be your best answer. Save money for a down payment. Work on improving your credit rating. I say this because you may find a mortgage you can just get into but then if there is any adverse change to your situation or the market you may find yourself in a worse situation. Many foreclosures now because of this.
It took my wife and I any years to get into a home but we now have comfortable payments at a good rate. There's a lot of piece of mind in that.
Hope you have a good Plan.
FHA or fannie mae my community. The My community will get you 100% and really is not score driven, you just have to get through the automated underwritting. Or FHA but you will need 3% down or qualify for down paymnt assistance
There are ways to finance 100% of the loan value, but you need a decent credit score (at least 620). There are some major downfalls to 100% loans. One is that the interest rates are usually higher, which means that you pay thousands more in interest. Another is that if you finance 100%, you will have no equity. If the property value goes down, you will owe more than the house is worth. Also, remember that you will need money for closing costs, inspections, etc.
Let's see... How do we convince a highly knowledgeable and savvy financial institution to give us hundreds of thousands of dollars that we may or may not be able to repay?
What usually ends up happening is that you get a loan for a ridiculously high interest rate, usually a variable with interest that will skyrocket at the first available excuse. Then, you won't be able to keep up the payments, and the bank repossesses your house. They get to keep all the money you've paid, up to that point, and they'll charge you tons of penalties, and destroy your already iffy credit rating, and they also end up owning your house. Meanwhile, you can barely get the slumlord of the local rat infested tenement to accept you as a tenant, because of your lousy credit. Also, it's raining outside, so all of your furniture gets ruined while it's sitting out at the curb, and the rear axle on car snaps in half from being overloaded with dripping wet furniture. To top it all off, your new roach infested apartment smells like mildew.
Here's an idea: Use your minimal, but, at least not bad credit to get a decent apartment for a reasonable price. Build your credit, so you can get a good loan, with a reputable, and only ordinarily heartless bank, and save up for a good down payment. Then, buy a house that you can afford.
It's a boring plan, but with the conditions you're describing, the only mortgage you're going to be able to swing is one intentionally designed to drive you to default. Have some patience and do it right.
Try a first time buyers program. I know people who were in your position who have gotten great homes using one.
Mortgage rates differ a lot and are based on your credit rating and the value of the home. Before approving your loan, your lender will scrutinize your credit history. There are two types of mortgages according to the type of rate: fixed or adjustable. Consult a mortgage broker or contact the lender directly asking for quotes. This lets you decide between both the varieties of mortgages.
Fixed mortgage rates use the current interest rate throughout the duration of the mortgage. If you want to pay a fixed amount every month, opt for fixed mortgage rates. Adjustable-rate mortgages vary according to economic scenario and hence can rise or fall. This means your monthly payments will vary as the interest rates change.
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