How to Buy a Manufactured Home with Bad Credit?

How to Buy a Manufactured Home with Bad Credit?

Bad credit is the most common factor that prevents people from buying their own manufactured homes. Many home buyers are discouraged from achieving their goals because of a blemish on their financial records. 

Do you find yourself in the same predicament? Is your bad credit keeping you from buying a manufactured home in central Alabama or the surrounding area? If yes, then this blog is for you. We will discuss some ways you can buy your mobile home with bad credit. 

What Score is a Bad Score?

First, let us clarify what we mean by “bad credit.” Before that, though, let’s look at what all this FICO jargon is about and what your credit score can tell you about yourself. 

In layman’s terms, your credit score reflects your ability to repay the loan—more specifically, your ability to repay it on time. The credit score ranges from 0 to 850. It is, however, usually between 350 and 800.

If your credit score is between 700 and 850, you can easily take out loans at low-interest rates and favorable terms. Every lender will be willing to work with you. If your credit score is between 600 and 700, it is still not going to be hard to find a decent lender, but you may have to pay slightly higher interest rates. If your credit score is less than 600, you are in a tough spot; lenders will think twice before approving you for a loan. Even if they do, you will have to pay significantly higher interest rates.

Is this to say that your loan application will be denied outright? Certainly not!

Bad Credit Does NOT Mean Loan Rejection

You have to stop equating your bad credit with loan denial. Why? Because there is much more to a loan than just your credit score. While credit score is an indispensable factor, whether your loan application would be rejected or accepted depends on many more things. And the decision is cumulative of all factors. 

Rather than a simple “yes” and “no,” it is the loan terms that your bad credit affects. These loan terms are the conditions that your lender will put before you, including the loan duration, down payment, and interest rates. These are the things that your credit score will impact.

So, How Can You Get a Loan Then? 

The easiest way would be to pay a higher down payment. Lenders will be more willing to lend you money if you can put down a bigger amount. A sizable down payment assures them that even if you cannot pay your monthly payments on time, they would not have a significant loss. Besides, the higher the down payment, the more invested a borrower is in the loan.

Secondly, your credit score will impact another primary loan aspect: your interest rate. If you are comfortable becoming a homeowner at the stake of higher interest rates, then go for it. 

The last course of action would be to improve your debt-to-income ratio—this is the ratio of how much you owe versus how much you bring in every month. If you want to make things better, pay down your existing debt and control your expenditure. Your debt-to-income ratio will be much favorable with your debts paid, and so will your loan terms. 

Now that your bad credit problem is sorted, are you ready to buy a manufactured home in Alabama? If you live anywhere in or near Montgomery, call us at (334) 283-1017 or fill out an online form to book your dream house today!