31 Dec Looking for a 2nd Chance in 2020?
Many people are looking forward to the New Year with hope, and perhaps a desire to put 2019 in the rear view as quickly as possible. Sometimes “life happens” and your goal of buying a new home or refinancing your current one seems out of reach. What you need is a second chance.
There can be any number of financial events that can impact your credit standing as well as your ability to secure a home loan: unexpected medical expenses, bankruptcy, foreclosure, student loans or credit card debt. They can happen to anyone but shouldn’t define your future.
These events and other factors can significantly lower your FICO – the common benchmark used by various financial sources to determine risk and eligibility for credit and lending. FICO scores typically fall between 300 and 850, with 670 considered average. If unexpected circumstances have dinged your score, you’re not alone; approximately 34% of Americans are below the median.
Fortunately, lenders can often look beyond the FICO numbers and consider other factors to qualify borrowers who are re-entering the marketplace after a credit event. These include:
- Down payment. If the larger amount you put down doesn’t accurately reflect your credit score, your chances improve to qualify for a mortgage – possibly at a lower interest rate.
- Income. Needless to say, a lender will look at your ability to pay through W2s and tax returns which may offset a lower credit rating.
- Assets. Your liquid assets could include savings accounts, stocks, 401ks or other funds that lenders look at for qualifying.
- Debt-to-income ratio. Also known as DTI, this refers to the ratio of how much you owe, versus how much you make.
- Employment. Lenders may look at your work history to get an idea of sustained income.
- Co-signers. Having someone co-sign on the loan can add their assets and income to improve your chances of qualifying.
There are several possible avenues to securing a mortgage with a less-than-desirable credit score. Military members and veterans can qualify for VA loans using less stringent credit requirements. The Federal Housing Administration (FHA) is notable for providing loans to those with poor credit and low down payments. With a credit score as low as 500, a down payment of 3.5% is possible. Other federal assistance programs and grants may be accessible as well.
Alternative and Second Chance mortgages offered by select lenders like EnTrust Funding (ETF) can also provide homeowners a fresh start. You may even qualify one day out of foreclosure, short sale, or bankruptcy. Our programs have no prepayment penalties and you are free to refinance your home as soon as you meet traditional lending guidelines.
They are designed for borrowers who have the following issues to be accommodated and granted credit:
- Maximum 90% financing is available to borrowers that have re-established their credit histories and have a minimum number of trade lines.
- FICO score as low as 500.
- Owner-occupied, second home or investment properties.
- We offer 5/1, 7/1, 15 and 30-year fixed rate options with no pre-pays on fully amortizing mortgages. Interest only option available on all loans.
- Loan types include purchase, rate and term refinance, cash-out refinance or lease option to purchase.
Credit damaged due to a financial event shouldn’t quash plans to purchase or refinance a home. There are opportunities for a second chance and ETF can help when no one else can. Give us a call to discuss how we can make your new year one of success and security.