Stated Income Mortgages are not the only way of getting a Mortgage with Bad Credit

Prior to the recent housing crisis, many homebuyers were getting stated income mortgages. When an individual gets one of these mortgages, they do not have to prove how much they earn. Rather, they can simply tell the loan officer how much they make. For some homeowners, a stated income mortgage was one of the only things that made getting a mortgage with bad credit possible.

For instance, if a couple was buying a home with a stated income mortgage, they could use one person’s credit score while stating both of their incomes. Thus, an individual with poor credit could buy a home using the strength of their spouse’s credit score. Even though they were only using one person’s credit history, they could state both of their incomes on the application. This made it possible to bypass one person’s bad credit without sacrificing the impact of their income.

These loans were also popular for people who worked on commission, people who had just started a new job, and people who worked for themselves. Now, however, these loans are very hard to obtain. Currently, almost every mortgage lender requires borrowers to prove how much they make. However, people with bad credit can still explore other ways to obtain mortgages.

National entities like the FHA (Fair Housing Authority) are willing to work with people who have imperfect credit. They offer home loans and refinancing opportunities to all kinds of consumers. Typically, the limits on these mortgages are lower than those offered by a conventional mortgage lender, but their interest rates are also lower in most cases. The VA (Office of Veteran’s Affairs) also offers mortgage to veterans or active duty military members who may not have perfect credit scores.

Most municipalities also have programs to promote homeownership. Many of these programs require interested people to attend an introductory seminar. There, they may learn about grants that are available, and they may also learn about how to repair their credit histories. Many of these programs will provide prospective homeowners with the down payment or the closing costs for their new homes if their incomes fall with a certain category. Typically, these programs are very willing to help people who are interested in getting a mortgage with bad credit.

People with bad credit can often be helped by a cosigner as well. When someone cosigns on a mortgage, they are not immediately responsible for the payments. The primary signer on the loan carries the primary responsibility. However, if they default on their obligation, then the cosigner must carry the burden of the debt. If consumers cannot find a conventional mortgage, they can look for a rent-to-own opportunity. Although they carry their own set of risks, rent-to-own mortgages offer homeownership to many people who would not otherwise be able to buy a home.

According to many analysts, stated income mortgages are becoming a thing of the past. However, getting a mortgage with bad credit is still possible. Consumers who are rejected by their first loan company should not despair. There are many opportunities and many paths on the road to homeownership.