Of Prime Interest: Mortgage finance options

There are instances where you may not fit into the five Cs of credit.

  • Feb. 3, 2016 7:00 p.m.

We have described the five Cs of credit—collateral, capital, capacity to repay, character and credit—in the past, understanding how your credit works and what a lender looks for in a   mortgage financing.

We have also described the pitfalls of what it means to have a low credit score rating of under 600.

But there are instances where you may not fit into the five Cs of credit.

For example, your credit might be bruised and or you may not be able to prove your income in the standard methods required.

This is especially true if you self-employed or work on commission.

Your credit rating is a very important part of a mortgage application, as it shows how you have handled your payments and is a predictor of the way you will handle your credit in the future.

In the case of alternative financing, even with a lower credit score there are lenders are willing to place a lesser importance on that and offer you mortgage financing.

An alternative lender will give you a shorter mortgage term (one to two years) and that will allow you to correct your credit and be approved by a major lenders with a better rate when the term is up.

When you are not able to confirm your income in the standard methods, there are options with alternative lenders that will accept different forms of income confirmation.

Their policies are more flexible and confirmation is easier than with standard mortgage lenders.

Collateral places more emphasis on the property if you are not able to meet all of the criteria for income and credit.

The mortgage may be based on a lower loan to property which is a lower risk for the lender.

The capital emphasis is taken into consideration but is not foremost in the eyes of the alternative lender.

It would though be prudent to have savings set aside in the event of unforeseen circumstances.

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