No Credit Mortgage – Students Trying to Buy a Home
Posted on | September 3, 2009 | No Comments
Getting a no credit mortgage is something that many students try to do but it is often not extremely successful. Getting a mortgage with no credit makes it very hard for lenders to give you a reasonable mortgage rate. You first mortgage rate is greatly determined by your credit score and if you have no credit score lenders have no basis to place an interest rate on your mortgage. With this being the case, most mortgage lenders will err on the high side and give you an extremely high mortgage rate.
The best option for most student who want to buy a home is to get some type of credit built up. You might be surprised at the little things you can do to build your credit. You might actually have a credit score now and you don’t even know it. By making regular payments on a vehicle, on rent or even on a cell phone can help your credit. The issue at hand is that these need to be in your name and no someone else’s name.
If your phone bill is paid solely by you but it was taken out in your parents name, your parents credit will be at risk, not yours. It is the same way with almost anything else that you make payments on. If you are renting an apartment but your parents signed for you, their credit score will be at risk for you not paying the bills and getting evicted. Most apartment situations do entail you signing a lease though so your credit score will be helped a little bit.
One of the quickest and easiest things to help build your credit is to use a credit card and make sure you pay it off each and every month. Most students cannot get a credit card with an extremely high balance so you are limited in what you can buy but that is a good thing because you shouldn’t be able to purchase large items without a full time salary anyway. With that being said, it is worth it to make some smaller purchases and make sure that you pay your bill in full each month.
Paying your credit card bill in full each month for about a year will go a long way with increasing your credit score. You will be very surprised to see how different of a mortgage rate you can get with a higher credit score. It could be the difference in hundreds of dollars a month on your mortgage payment so it is worth it to take the time to make your credit score much better.
Author: Alan Lake
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