Challenging Credit is ok

Your credit report may be full of dings, compounded with a history of foreclosure and bankruptcy, but we can still offer you financing for your highrise purchase or refinance. It does not matter whether you have charge-offs, collections, or tax liens on your credit report, as long as you can meet our guidelines for loan approval.

The mortgage lending industry uses categories to asses the credit risk of any particular borrower. If the property checks out and you have sufficient income, impeccable credit and the required down payment you are considered an 'A' borrower. A borrower can fall short in one of these areas and still be considered an 'A' borrower, as long as the other areas can compensate for the weakness. For example, a borrower that exceeds the required monthly debt-to-income ratios (28% housing debt and 36% combined debt) could offer a large down payment. Many lenders will also excuse modest credit 'blemishes' if a reasonable explanation is provided (i.e. job transition, medical problems). Being 30-60 days late on one credit card payment is a typical blemish that could be accepted by Luxury Mortgage Group.

But what if you have more serious marks against you credit? Depending on how tarnished your credit history has been, we can place you into one of the following credit categories:


A-minus credit:
Acceptable blemishes within the last two years: Charge-offs, or collection accounts, of minor amounts (e.g. less than $500 in all) are acceptable. Medical bills, including hospitalization and clinic visits, can usually be disregarded. As for payment habits, the borrower can have no more than two 30 days late payments, or one 60 days late payment on revolving or installment accounts.

B credit:
Acceptable blemishes within the last 18 months: Up to four 30 days late , or up to two 60 late days payments are allowed on revolving and installment debt. If the credit ding is an isolated incident, a 90 days late payment is allowed within the last 12 months. Charge-offs, or collection accounts, which are isolated, insignificant, and less than $1,000 in all, are acceptable. However, outstanding collection accounts less than four years old must be paid. Bankruptcy or foreclosure that had been discharged or settled previous to 36 months is allowed.

C credit:
Acceptable blemishes within the last 12 months: No more than six 30 days late payments, three 60 days late payments, or two 90 days late payments are allowed on revolving or installment credit. Open collections accounts and charge-offs may not exceed $4,000 and must be paid in full. Bankruptcy or foreclosure that has been discharged or settled prior to the last 24 months is acceptable.

D credit:
A sporadic disregard for timely payment or credit standing categories the borrower in this class. Open collections accounts, charge-offs, and judgements must be paid through loan proceeds. The borrower who had filed bankruptcy and had been discharged prior to the last six months is acceptable, as much as the ex-homeowner who had his previous home foreclosed and settled prior to the last six months. However, recent mortgage payments cannot be longer than 90 days past due.

The above are general industry guidelines to make lending judgement on the borrower's loan application. There are no hard-and-fast rules of separating the borrower on the border line between one credit category and another. Also, there are compromising variations depending on the degree of subjectivity involved in underwriting.

Depending on the extent of the blemishes, borrowers with less-than-perfect credit histories can expect to pay higher than conforming interest rates for their home loan. But if getting into a highrise or refinancing it is your goal, we have plenty of programs to get you the appropriate financing. Give us a call to get started today.

Take a look at our Alternative Financing (hard money) section for more information

Additional Highrise Mortgage Programs: