Will a Criminal Record Prevent You From Getting a Mortgage?
- Mortgage lenders generally care more about your credit score, income, and employment.
- Some lenders may do a background check and have policies that make it harder for people with a criminal record.
- If you are facing criminal charges, avoiding a conviction can keep your record clear so it won't hurt you in the future.
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You were arrested five years ago and spent three years behind bars for the crimes. Now you’re out and trying to turn your life around.
In the past two years, you’ve gone back to school and gotten a job. Now you’re interested in buying a home. Will lenders approve your mortgage application if you have a criminal record?
Your housing options after a criminal record can depend on your individual situation. Talk to a criminal defense attorney for legal advice about your case.
The frustrating answer to getting a mortgage after criminal convictions is—it depends. Receiving a mortgage loan is always up to the lender and their discretion. The lender does not have to approve you for a loan. That goes for people without a criminal record as well.
Your lender is more likely to carefully consider granting your loan if your background check does not pass. Typically, a criminal record is a cause for concern because it could show your lack of responsibility or stability. The lender wants to make sure that you pay back your loan.
Lenders can set up their own policies. Generally, lenders care more about your income, employment, and credit score. If the policy includes running a criminal background check and denying those with a criminal history, they can do it.
Some policies might approve people with misdemeanors on their record but deny those with a felony conviction.
Anti-discrimination laws mean they can’t deny you based on things like your race, religion, or gender identity. Still, the laws do not force lenders to ignore an arrest record.
A mortgage lender might approve your loan but offer a higher interest rate to ensure they make a profit on your loan. This can also be financial protection on their part—if you miss payments, then they are covered by a large amount of interest they make over time.
You can always say no to loans with high-interest rates and look at other companies. A criminal record might affect your chances with other companies. Sometimes, accepting a high interest rate is the only option for buying a home.
Many lenders never actually decide to run a background check. If you don’t bring up your record, they may never know. They may not dig deeper into your history if you have a stable job and income.
You can also ask around and try to find a lender that does not run background checks on homebuyers.
On the flip side, a loan officer may ask you other questions that expose that record. For instance, they’ll want to see your credit score. A low credit check score can indicate that you have not been working or paying off credit. You may need to improve your credit report before getting a loan.
Lenders commonly want to know your employment history. They’ll likely also look into your residency for the last decade. Some even call past landlords as part of a background check or application review.
If they want to know where you lived for the last 10 years and where you worked for the past three years, you may have to tell them you were in jail for part of the time.
They may still approve the loan. After all, you’re now out and employed. However, it can be a red flag and may go against specific policies, leading to the lender rejecting your application.
If you’re facing criminal charges, it’s essential to consider all the consequences of a conviction. If you are convicted and sentenced, it can impact your life in different ways for years after your sentence is up.
To protect your future, be sure you know about all your criminal defense options. The best way to seal a criminal record or avoid a criminal conviction is to work with an attorney as soon as possible.
If it is before your conviction, your attorneys can try to lower the charges. If it is after the sentence, they can work to expunge the record to reduce its negative effect on your future. Speak with a criminal defense attorney about your right to get a home loan.
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