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By Nick
Graziano
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 (http://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 (http://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
(http://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.
Nick Graziano
http://www.aaamortgagerate.com (http://www.aaamortgagerate.com)
http://www.mymortgagespecialist.net (http://www.mymortgagespecialist.net)
info@aaamortgagerate.com (mailto:info@aaamortgagerate.com)
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