Getting a Mortgage with Bad Credit: Is it Doable?
By: Ajeet Khurana
My experience suggests that people who convince themselves that they can never own a home due to their bad decisions in the past (leading to bad credit) are incorrect. More and more lenders are opening the door to those that have poor credit because they think they deserve a second chance. One tends to think that a person with excellent credit gets a mortgage easily. Although this is not easy, it is definitely possible to get one for yourself.
Mortgages and Bad Credit
Twenty years ago those with bad credit would be hard pressed to be approved for a mortgage loan. As of today, it is a common sight since lenders have made their rules and regulations pretty flexible. This helps them attract a wider audience. But with bad credit, you may still have a tough time finding a lender. You should be clear on what to expect. This makes the whole process quiet easy.
First, do not paint a gloomy picture when you will be declined by many people before someone accepts you. When you apply for a loan there are going to be several things that you will need which include: your name, your address, your social security or tax payer identification number, as well as your last tax return. It varies from lender to lender but you may need to provide proof of a bank account. Since you have bad credit you may also be asked to get some additional references. You will be able to obtain letters of credit or reference from most utilities, which will basically state that you are a customer and you pay your bill. A letter of reference from your school (if you have loans with them) or personal letters form your past lenders may be attained to increase your reliability in the lenders eye.
Generally, even if you have a bad credit you still manage to get approval for a mortgage. If not you may ask someone to co-sign with you. A co-signer is allowing for you to borrow their credit score to help you get approved for the loan. While this seems like a simple answer, you need to remember that if you default on your mortgage you are not only hurting your credit, but the credit of your co-signer. The co-signer must therefore be informed and must discuss this issue at length before he falls into a trap.
Down payment is another way to obtain a mortgage loan with bad credit. Sometimes you will need to have as much as 15 to 20% of the sales price to put down on the home. This shows the lender that you are serious about keeping the home and when they know that you have invested they assume that you will keep your end of the deal by making timely monthly payments. One realizes that if he has a co-signer or a down payment he can attain on a better rate of interest than in the absence of either of these two things. If you don't have a co-signer and you need a loan for 100% of the purchase price you can expect for your interest rate to be as much as 5% higher than the average.
Get bad credit mortgages & bad credit loans. Also get remortgages.
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