Even if your credit is a little damaged, Innisfil is an excellent place to invest in a property or look for a bad credit mortgage. Current MLS® stats paint a positive picture of the real estate trends in the area. For example, the average selling price in Innisfil was $967K as of June 9th, 2023. That represents an 8% increase in the monthly numbers and an 8.5% increase in the quarterly statistics for home prices. In the last 28 days, there were 323 new listings, with 81 homes sold.
Those numbers mean real estate in the area is a good investment. However, there are people who struggle with bad credit. For many of those applicants, it’s not possible to get a mortgage with a traditional lending institution.
The problem for these people is a low credit score. Lenders use this three-digit number to decide whether or not to grant a loan. Equifax is a credit reporting agency. They calculate these scores by collecting information on individual financial behaviours and credit histories. According to them, credit scores below 560 fall into the bad credit range.
So, it’s important to find out what this number actually is. Read on to find out how you can check your credit score to see where you stand with this important financial metric.
How To Check Your Credit Score
There are several reasons why you should check to make sure your credit score is accurate:
- Checking the numbers on a regular basis can help you stay on top of what potential lenders are seeing.
- Obtaining your credit report regularly can help you find any incomplete and or inaccurate information.
- Staying on top of these numbers allows you to stay abreast of your current credit situation.
Remember, this three-digit number is important for your financial health. Understanding what it means can help you decide on the kind of loan that best suits your position.
Private Lenders Offering Bad Credit Loans in Innisfil
Private lenders are generally more flexible than their traditional counterparts. That’s good news if you’ve got a damaged credit score. Many of these lenders will approve loans that have at least 25% equity available. That’s an important requirement and one of the reasons that many private lenders do require a property appraisal.
A large number of bad credit mortgages are for residential properties. For a loan on a commercial business, the equity requirements are a little higher at 35 percent.
Traditional banks and other institutions like Credit Unions place an emphasis on your credit score. Private lenders focus on existing debts on a property as well as the market value.
Requirements for Bad Credit Mortgages
Private lenders have more flexible requirements than traditional banks. Federal law dictates that more traditional financial institutions need to look at an applicant’s financial history, including the credit score.
Private lenders focus on the existing debts and the market value when they are trying to decide whether to approve an application. Along with the equity requirements mentioned above, private lenders calculate a number called the Loan to Value (LTV) ratio. The formula is simple. Divide the value of any existing mortgages by the market value of the property or house.
Here’s an example. The house has a market appraised value of $1 million. If the property has a $750,000 mortgage against it, the LTV is 75%.
The LTV is an important part of the approval criteria. Of course, there are others that will help the private lender make a final decision. These include:
- The property type and the value of it. It’s important to keep in mind here that some private lenders specialize. Some prefer to work with commercial properties, and others with residential homes.
- Income and employment verification are still important. Private lenders want to be sure that you can repay the money. They might request recent tax returns and income statements as well as proof of employment.
Having all the information you need to make a decision about applying for bad credit mortgages in Innisfil means understanding the costs too.
Interest Rates and Fees For Bad Credit Mortgages in Innisfil
Private lenders need to consider the risk when they are approving or denying bad credit mortgages. That’s why the rates and fees they charge can be higher than more traditional lending institutions. They also charge administrative, home appraisal, and even legal fees.
Here’s a quick hint about the home appraisal. Curb appeal matters. An appraiser gets the first impression from the outside, and an unruly hedge or uncut lawn can start the process off on the wrong foot.
As of 2023, a person applying for a bad credit mortgage can expect interest rates between 8% and 12%. Lender and broker fees usually range between 4% and 8% of the mortgage amount and are paid when the mortgage is set up. Other smaller fees include legal fees ($1,500 to $3,000), appraisals ($500 to $700), and administrative fees ($500 to $800).
Look for a mortgage broker that can send several different quotes because they have multiple lenders in their network. If you have a weak credit score, you don’t need to give up on improving your financial future.
How to Strengthen a Weak Credit Score
Improving a credit score takes time and effort. However, you can begin by making all of your payments on time. Equifax suggests that you keep your credit utilization rate below 30%. That’s the amount of revolving credit that you’re using divided by the total amount that’s available across all the accounts. They also suggest that you limit the amount of new accounts you apply for.
Mortgage Broker Store is a private mortgage lender in Innisfil that can help you with a bad credit mortgage. We serve several locations in the GTA. That includes locations like Barrie, Keswick, Angus, and Wasaga Beach. Call 416-499-2122 or email firstname.lastname@example.org for some free advice. Our team has 34 years of experience.