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Articles » Low Credit Score Loans | | Most Asked Questions About Low Credit Score Loans |
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Why is my credit score and credit report needed when I apply for low credit score loans?
Lenders will always look at your credit score when you apply for a loan. However, for loans for low credit score people, they will review your credit report and look at information on your payment history, your debt to income ratio, and your job stability. They need to know that you have a source of income in order to be able to pay, and that you have good credit payment habits. This is why it is important to build up your credit score and improve your credit record before you apply for a low credit score loan .
What are the things I should pay attention to when I review different low credit score offers?
Even if you get an offer from a lender who specializes in loans for people with low credit scores, offers from different lenders will vary. Compare their interest rates, points and fees.
Interest rates are either fixed or adjustable. Adjustable interest rates are affected by market conditions and when interest rates rise, so will your monthly mortgage payments. Find out from the lender if your monthly payments will go down when interest rates decline. Also ask about the annual percentage rate (APR) of the loan, which takes into account the interest rate, broker fees, points, and other charges.
Points are the fees that you pay to the lender for the loan. These are usually linked to the interest rate, and one point is about 1% of the loan amount. The more points you pay, the lower the interest rate will be.
There are many fees that are involved in loans. Among these are underwriting or loan origination fees, which are basically processing fees and are a percentage of the loan amount. There will also be transaction, settlement and closing costs, which include the application fee; abstract of title fee; title examination fee; title insurance fee; property survey fees; attorneys’ fees; recording fees; fees for preparing deeds, mortgages and settlement documents; notary fees; appraisal fees, and credit report fees. Ask the lender to provide you with an estimate of these fees.
I have an existing home mortgage loan and I am now having difficulty in payments. Is there any loan option for me?
The Federal Housing Authority has a program called FHASecure, which allows borrowers to refinance their mortgage loans in order to avoid foreclosure. This program is especially tailored for people who have been shocked by a sudden increase in interest payments in their adjustable mortgage rate loans, and those who are suffering economic hardship due to loss of overtime or medical needs.
The following are the requirements to be eligible for the FHASecure loan program:
• A history of good loan payments before the loan’s rates were reset
• The interest rates must have been reset between June 2005 and December 2009
• At least 3% cash or home equity
• A history of continuous, sustained employment
• Enough income to make the mortgage payments
The loan may be a conventional loan or an FHA loan, and there is also no minimum credit score requirement to apply for the FHASecure loan.
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