You Can Get a Mortgage No Matter Your Credit Rating

You Can Get a Mortgage No Matter Your Credit Rating

Are you renting today? Do you suffer from bad credit? Are you convinced that it is impossible for you to obtain a mortgage that will allow you to purchase the home you long for?

Many people do not realize that poor credit does not make it impossible to get approved for a mortgage. There are some steps you can take and some things to put in place first, but you can get the mortgage you want.

Mortgages were too easy to get in the previous decade. Easy credit and no money down was the sign of those times. If you got in trouble with your mortgage you could refinance and take out the skyrocketing equity in your house to survive another day.

Those days are long gone. It is no longer a simple matter of finding a house that you like and going to a bank or a mortgage broker and signing on the dotted line. If you apply for a mortgage today without adequate preparation, you will be turned down no matter what your credit rating.

Your credit score plays a role in the mortgage approval process but it is not the primary criteria used. It is far more important that you have steady employment with sufficient income and that you can demonstrate an ability to pay the mortgage back on time. Lenders are always available and ready to lend to people who can prove that they will pay the loan back with interest.

Mortgages are always going to be a tougher loan to get. The amount of money tied up with a mortgage is much larger than for a simple personal loan. The following steps can help you prepare for your mortgage acceptance.

Explain Why You Have Poor Credit

When lenders check your credit rating and find that you have bad credit, they will need to understand why. It is critical that you review your credit report and understand for yourself why your credit is not good.

Credit reports can contain erroneous information. Find that information and notify the credit bureaus so that it can be removed from the report. Always notify them in writing. The written notification authorizes them to investigate the inaccurate information.

The creditor that made the erroneous report will have to prove the report or it will be removed from the credit report. Allow for 60 days for the corrections to be reflected on your report.

How Much Debt Are You Carrying?

Do you know what your debts are and how much they are? If not, you need to examine this part of your credit profile. If you are carrying too much debt for the amount of income that you take in, no one will approve you for a mortgage.

If you realize that you are already too overburdened with debt payments to pay off a mortgage, you will need to pay off some of your existing debt. You want the lowest debt-to-income ratio possible. Even a high credit score will not help you if you are paying out every dollar you take in. You may have to cut out some of your entertainment for a few months in order to pay off debt but it is worth it once you move into your new home.

Small savings here and there can help pay off large debts.

Put Down More Money

Down payments range between 10-20% of the price of the home. If you have bad credit, do not be surprised if the lender asks you to put down 20%. This gives you equity in the home and a smaller mortgage. Plus, you will be able to avoid private mortgage insurance.

What Other Assets Do You Own?

Lenders consider people with larger bank and investment balances to be lower risks. It is possible that your bad credit exists despite having liquid assets.

By   Christian  Larkins

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