A bad credit rating does not have to be a barrier to home
ownership. It is possible to turn your credit around, according to mortgage
broker Bryan Guertin. Correcting credit problems is one of the services he
provides through Mortgage Intelligence.
It is often when you apply for a mortgage that you discover
that you’ve got issues with your credit rating. Lenders check your credit score
using the Vecan system of scoring available through the Equifax website. Most
lenders require a score of 650 or lower of anyone applying for a high ratio
mortgage – that’s with a down-payment of less than 20 per cent of the price of
the house. Most score at around 680 or 700, Guertin says of his experience.
“You need to know how
to fix this,” suggests Guertin.
That’s where he comes in. If your credit score has dropped
to where you don’t qualify, Guertin applies some creative financing to the
equation. A home actually can be purchased with a down-payment as low as 15 per
cent. He arranges for 75 per cent of the house price as a first mortgage
through a “flexible” lender. Then he secures secondary financing, or a second
mortgage for the other 10 per cent to bring it up to 85 per cent. High risk
borrowers must purchase mortgage insurance to protect the lender as well.
High risk mortgages such as these come with a high interest
rate, so he locks it in for just two years. During that time, if clients take
his credit correcting advice, they can then qualify for a lower mortgage rate
over a longer term.
Guertin admits that the causes of bad credit ratings are
many, citing marital break up and job loss as two of the main contributors. The
important thing to keep in mind is that home ownership is possible even with an
unstable financial past.
“When I sit down with the people, I tell them what they have
to do. I explain the problems they have with their credit and tell them it
usually takes two years to get your credit back in order,” the mortgage broker
explains.
Guertin provides an in-depth review of the client’s credit
report to guide them toward financial recovery. He’s seen clients in great
financial difficulty turn their lives around and move onto a dream home after
just a few years.
Find out more about Mortgage Intelligence at the website
www.bestdealmortgages.com.
