Bad Credit? Qualify Yourself For A Zero Down Mortgage Loan

I decided to write this article today after closing a home purchase loan for a couple that had some major credit issues. They got into the house with ZERO down payment, and only had to bring $600 for the closing costs. Their situation was pretty bad, I'm talking about a bankruptcy 2 years ago, thousands of dollars in outstanding collections, charge-offs and debt to income ratio of 49%. By the way, we left all of their outstanding charge-offs and collections open which means they didn't have to pay any of them off! So many think they won't be able to qualify for a mortgage loan. Many will keep thinking they can't qualify until they read this article.

My name is Nick Graziano and I have been employed as a Loan Officer for 5 years. I have experience originating conventional mortgage loans as well as sub-prime (non-conventional) residential mortgage loans. Many of the clients that I deal with have great credit (and know it) and have no problem getting a loan but then there are those with credit problems (and they know it too). The ones with great credit are the ones that are easy to close, get the best rates and all with minimal time involved on the part of myself.

But, this article is for those with credit problems, low income and those who cannot afford a down payment. I am going to show you how to qualify for a loan with ZERO down payment, and the only out of pocket expense will be less than $1,000 ( if any at all) to cover some of the closing costs. This is just an example of one particular loan program that I use but there are numerous others out there. I picked this loan program because it allows 100% financing down to a 575 credit score

I see it on a daily basis.

Everyone wants to own a home and those with credit problems are calling every mortgage company in the phone book and applying on every mortgage website out there. (And there are many out there). Only to find out later that every time a mortgage company pulls their credit, their credit score dropped a few points, or that the particular lender doesn't originate the type of loan that you need. That is frustrating.

Step by Step

Here is where I show you how to qualify yourself for a zero down loan.

1.The first thing you need is your tri-merge credit score. I would be more that happy to suggest a few places on the internet that you could go to get your credit score but I don't want this article to seem like an advertisement. So, the best thing to do is to do a search on yahoo.com for terms like "free credit reports", or "tri-merge credit report". Just make sure that you end up pulling a "tri-merge" credit report on yourself. A tri-merged credit report pulls your credit profiles from the 3 major credit reporting companies and merges it into 1 report. The nice thing about pulling your credit yourself is that it will NOT affect your credit score. Bookmark this page while you go get a copy of your credit report and then come back to see the additional steps.

2.What is your credit score? Most mortgage lenders will use the middle of the three scores. Example: Your credit scores are 576, 525, 599. In this case you would use the 576 credit score since it is not the lowest score and it is not the highest.

3.Is your middle credit score at least 575? If so, congratulations and move on to the next step. If your middle score is less than 575 you have some homework to do. You can either sign up with a credit repair company ("search yahoo.com for credit repair") to try and remove some derogatory items on your credit which will raise your credit score OR you can try to acquire some credit to help re-establish your credit worthiness. The easiest way to re-establish your credit is by either getting a car loan or credit card designed to help re-establish your credit. Again search yahoo.com for "credit cards to re-establish credit"

4.Do you have a bankruptcy or foreclosure in your past? Has it been 2 years since it was discharged? If yes, move on to the next step! If not, unfortunately in most cases your bankruptcy or foreclosure will need to be discharged at least 2 years or you will need to have at least 5% down payment.

5.You will need to document 24 months of recent mortgage or rental history. If you rent from a property management company we will need a Verification Of Rent completed. The form will be supplied by your mortgage lender or broker. If you rent from a private landlord, you will need 24 months cancelled checks/ or money order receipts with no payments over 30 days late. Sorry, you cannot prove your rental history if you pay your landlord cash every month, unless they are a property management company. If you are unable to document your rental history there is a way around it. Get your credit report and look for the following: Do you have an active credit line on your credit report that has been open for at least 24 months? Has this credit line had any activity in the last 6 months? If so, move to the next step.

6.Look at your credit report. Do you have a credit line that has a 12 month history reporting? If so and as long as you have no more that 2x30 day late payments then move on to the next step.

7.Look at your credit report again. Do any of your credit lines have a high limit of at least $3,000. If so, move to the next step.

8.Now take one more look at your credit report. You will need 1 more additional open credit line reporting on your credit report. (It does not matter how long it has been open or how much the credit line is for).

Well, congrats! You made it this far which means that your credit might qualify for a Zero Down Payment Loan. The loan program you qualified for is subject to change and is subject to additional conditions. This article should not be construed as an advertisement to lend. These are the steps that I go through when trying to pre-qualify a client that has credit problems. There are many more factors to determine so please discuss this with a qualified mortgage professional.

You are probably asking yourself what you are supposed to do with the information that was given to you in this article. The first thing is to contact a few mortgage companies. Ask them if they have any zero down loan programs that will go down to a 575 credit score, or whatever your credit score is. Remember, you will need at least a 575 credit score to qualify for this particular loan program. Also, in order to minimize your out of pocket expense, ask your mortgage professional if the property seller is allowed to pay 6% of the purchase price towards closing costs. If so, you will need to remember to negotiate that into your purchase contract when you make an offer on a house.

About The Author

Nick Graziano

http://www.aaamortgagerate.com

http://www.mymortgagespecialist.net

info@aaamortgagerate.com

---

Bankruptcy and Buying a Home

Filing bankruptcy is a stressful time in a person's life.... Read More

How to Find the Best Mortgage

The purchase of a new home is one of the... Read More

Tips for First Time Home Buyers

When looking at tips for first time home buyers, you've... Read More

Mortgage Information for the First Time Homebuyer

Inflation in the United States is increasing rapidly and home... Read More

Home Equity Line of Credit ? Great for Remodeling Projects

Many homeowners are lucky enough to find a house that... Read More

Mortgage Debt Elimination in 5 to 7 years!

Mortgage Debt Elimination shows that most home loan debts will... Read More

UK Mortages: A Guide Through The Maze

Types of UK MortgagesYou may be wasting your money with... Read More

How To Save Hundreds A Month On Your Mortgage

When it comes to American spending habits, the sad truth... Read More

Why Refinance Back into a 30-Year Loan?

One of the biggest reasons homeowners refinance their mortgage is... Read More

Home Equity Lines of Credit - the Basics

A Home equity line of credit is a loan which... Read More

Why Choose a Remortgage?

A remortgage can be used for the purpose of gaining... Read More

Where To Find The Best Rates For Your Mortgage?

As with all of my articles this will be based... Read More

Reverse Mortgages ? A Tax Free Income For Senior Citizens

I fully realize if it sounds too good to be... Read More

Home Mortgage Refinancing - Things to Consider When Looking to Get Cash Out on a Refinance

When you refinance your home mortgage, lenders often tempt you... Read More

How I Became a Hard Money Lender

Unlike other investors, my venture into real estate was a... Read More

Why a Mortgage Professional Beats a Banker Every Time -- The Story Tells It All

The best way to explain why a mortgage professional is... Read More

Uk House Price Increases Take A Summer Holiday

Property website Rightmove has released its latest house price index... Read More

How to Buy a Home Without a Down Payment

Mortgage rates are rising and it's becoming more difficult for... Read More

Why Its Important to Get Pre-Approved

Having a pre-approved mortgage will give you the confidence of... Read More

Applying Online For A Home Loan Can Give You an Instant Approval

"Instant Approval For Home Loans" is a common refrain for... Read More

Bad Credit Mortgage Loans - Are You Killing Your Chances of Getting Approved?

When you have poor credit, your list of lenders that... Read More

Home Equity Loan ? A Reverse Mortgage Could Provide a Comfortable Retirement!

While only comprising about 1% of all mortgages, the reverse... Read More

Mortgage Info You Can Actually Understand!

This is a great time to Refinance Your Home or... Read More

Preventing Foreclosure Proceedings and Understanding Your Options

Every year over 8 million homeowners are seeking help preventing... Read More

Reverse Mortgages Learn The Facts First!

Reverse Mortgages, Most Common Features:Many offer special appeal to older... Read More