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Unformatted text preview: concerned about one or two isolated slow payments. Say a borrower has six credit references and five are rated as “paid as agreed” and the other a little slow. Lenders usually ignore the one slow payment because the borrower's overall credit rating is good. The one slow payment is probably an error in rating or may even be a disputed bill. Some buyers are concerned about a problem they may have had with one creditor. They are afraid one bad rating will ruin their chances for a loan. This is not true. Most lenders will accept a valid explanation and be guided by the overall credit history of the borrower. On the other hand, a person who has previously owned a home and has adequate income to meet the financial requirements of a mortgage may have a payment record which has not demonstrated the desire to pay, for example, payments may have been regularly late. Thus, in some cases the prospect with the desire to make payments will be given favorable consideration by lenders. What if the borrower has had a poor credit history? Does it mean the borrower is automatically eliminated from any type of real estate loan? It is certainly a big strike against the borrower. However, it does not mean the
Dynasty School (www.dynastySchool.com) 13-15 REAL ESTATE FINANCE
borrower will never obtain a loan. If the borrower is able to explain the reason for the poor credit and convince the lender that he or she is now a good risk, the loan will be seriously considered. People get into financial difficulties for reasons beyond their control. Unemployment, sickness, and divorce are the usual reasons. If a borrower had a credit problem in the past because of unemployment, it does not mean the borrower lacks the desire to pay. It just means there was a temporary problem. Bankruptcies – People who have had bankruptcies are a special problem. They have had “credit failures.” It is possible for them to get another loan, but much more difficult, because bankruptcy is usually regarded as an inability to a...
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- Spring '10