No Credit Mortgage – Can You Get a Low Interest Rate?
Posted on | August 20, 2009 | No Comments
Getting a no credit mortgage is no small task. The idea of having no credit makes it very difficult for mortgage lenders to assess the risk of your default. Having absolutely no spending history is not a good thing because lenders will automatically think that you are likely to miss payments or not pay them at all. This is very bad news when it comes to the mortgage interest rate you are going to get. It is very unlikely that you will be able to get a low interest rate.
If you have no credit it is likely that the interest rate is not a big deal to you, but it should be. If you sit down and crunch the numbers with a mortgage calculator you will notice that you will spend so much more with an interest rate over 10% just because you have no credit history. It would almost be advisable to get a low balance credit card and try to build up some credit before going through the mortgage process. You are going to go through a lot of headaches by having no credit.
Also realize that paying monthly bills and other expenses helps to build your credit. It is actually better to have a horrible credit score than no credit score at all. That being said, there are some mortgage lenders out there that will help you with a no credit mortgage. Once again, it is going to be a huge headache but if your dream is to own a home, sometimes the headaches are worth it in the long run; especially to live the American dream.
You may also want to consult some of your friends and family on the issue. You never know who might have gone through the same process. Most social circles have someone financially intelligent in them and they can help you out a ton when it comes to getting a mortgage. Most Americans struggle when it comes to financial knowledge so make sure to use the resources you have because you could end up saving thousands of dollars in the long run.
Do not be discouraged by the fact that you have no credit; take it as a challenge. If you can wait a little while to buy a home, get out there, build up your credit, and prove to mortgage lenders that you deserve a lower mortgage rate. You will not only save money but you will feel much better about yourself in the long run!
Author: Heather Best
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