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

---

Mortgage Free In 15 Years!

Imagine paying your mortgage off in 15 years! Think of... Read More

Home Mortgages: Does a No-closing-cost Loan Make Sense for You?

I have heard a number of radio ads and have... Read More

A Home Equity Loan - What You Should Know?

Asking yourself, "Is a home equity loan right for me?"... Read More

Getting The Best Home Equity Loan

Owing to the popularity of home equity loans, there are... Read More

FHA Mortgage: Whats the Best Way to Show an Underwriter that Youre Ready to Buy a House?

Mortgage underwriters can be a suspicious bunch. If you have... Read More

Buying A Home After Bankruptcy - Get A Mortgage Loan After Bankruptcy

If you have a recent bankruptcy on your credit and... Read More

Refinance Your Second Mortgage

A 2nd mortgage is a secured loan on your property,... Read More

Should You Get an Interest-only Home Mortgage?

Before you consider taking out an interest-only mortgage, you should... Read More

How To Save Thousands in Interest on Your Home Mortgage!

So you have a mortgage on your home or planning... Read More

Adjustable vs Fixed Rate Mortgages

Mortgage rates can either be fixed for the duration of... Read More

The Right Home Loan - Floating or Fixed Rate Loan

Choosing a home loan has never been tougher. Yes, with... Read More

Guide to Mortgage Terms

Listed below is a guide to mortgage terms. It is... Read More

Home Loans and Mortgages ? Time to Consolidate Loans?

Home equity loans and lines of credit are useful tools... Read More

First Time Home Buyer Loans Made Easy

When it comes to firsttime home buyer loans, a little... Read More

Home or Investment Property Equity: Be Sure the Bank Gives You All that You Deserve

Home equity is your own personal money machine. If you... Read More

Shopping for a Mortgage, Avoid Three Common Mistakes

Buying a home or refinancing one is perhaps the largest... Read More

Kingsland Saint Marys & Kings Bay Real Estate - VA Mortgage Information For Home Buyers

A VA guaranteed mortgage is the usually the best way... Read More

Key an Eye on Your Mortgage Payments

In previous decades, when a borrower missed a payment on... Read More

Repayment of Loans ? Lessening the Bitterness of the Process

So how have you planned the repayment? Don't tell if... Read More

The Truth behind Pension Mortgages

A pension mortgage may seem lucrative at the first sight.... Read More

Thought You Can Go All Alone In Mortgages! Mortgage Advice Beneficial In All Important Decisions

Mortgages are easy as long as you understand them well.... Read More

Home Equity Loan ? Not Just For Home Repairs, And Tax Deductible, Too!

Thanks to the combination of low interest rates and skyrocketing... Read More

Option One Mortgage Loans ? Getting an Option ARM or Option One Mortgage Loan

Have you heard about or been interested in finding out... Read More

Self Employed Mortgage Loans - A Survival Guide

When you're self employed you have numerous advantages. As you... Read More

How to Find the Lowest Rate Possible!

The quest is on! You're in the market for a... Read More

Refinance Your Home Mortgage Online

The largest financial obligation most people ever take on couldn't... Read More

Mortgage: Rehabilitation Of Financial Helplessness

The term 'mortgage' is assumed really controversial by people when... Read More

Home Equity Loans Company ? 7 Key Questions to Help You Choose One

Choosing the right home equity loan can be tricky; you... Read More

How to Buy a Home Without a Down Payment

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

Advantages Of Mortgage Pre-Approval

There are several advantages to getting mortgage pre-approval before looking... Read More

Why Choose a Home Equity Loan?

There are many reasons for choosing a home equity loan.... Read More

Mortgage Brokers or Banks: Which is Right For You?

When you're looking for a home loan, you might work... Read More

Fixed Rate Mortgage Loans - Understand the Pros and Cons of the Fixed Rate Mortgage

There are many benefits and drawbacks to consider when deciding... Read More