Is It Possible to Qualify for a Mortgage Loan With Bad Credit?

To find out the answer to the question raised above, let's take a closer look at mortgage loans and the usual requirements imposed on them.

A Straightforward Answer

Yes, it is! In fact, the growing demand for bad credit home loans has convinced many a lender to extend affordable credit programs, not only to those with good credit history, but even to consumers with poor or no credit.

Still, you should remember that the features of mortgage loans for bad credit are not as good as those offered to borrowers with almost perfect credit rating. For instance, bad credit programs tend to carry steep rates of interest and fees, strict payment terms and conditions, and stringent application requirements. Nevertheless, such features usually improve once you have proven your capability of submitting on-time and complete payments to your lender.

Now what can help consumers, like you, to get the best deals in town? Well, there are two strategies you can employ. First and foremost, you may decide to postpone your plans of taking out a loan, until you can cause dramatic improvement to your credit history. To do this, you may need to pay off first some of your existing credit accounts. You may also decide to cut some of your current lines of credit, particularly credit cards which carry high interest rates. In time, such steps will cause gradual changes to your credit history and soon enough you will receive better credit offers.

You may also look for a creditworthy individual to co-sign your application for a bad credit mortgage loan. Always remember that the good credit standing of a close friend or relative can help compensate for you poor credit rating. In fact, it can boost your chances of being granted a suitable credit program for you to buy your dream home.

Just remember that the manner by which you will manage your future payments will have a huge impact on the credit history of your co-signer. So, if you want him or her to maintain his or her excellent credit standing then, you should resolve to keep up with your dues until the term of your mortgage loan ends.

Some Last Minute Reminders

  • Do your research before submitting your application to your target lenders. After all, you might file an application with a firm that does not extend mortgage loans to bad credit consumers. And if this happens, your application will surely get declined and your score will drop even further. So, to avoid this problem, we suggest you submit applications only to lenders that deal exclusively with consumers with bad, fair or no credit history.
  • Schedule a business meeting with your target lenders. That way, you can have the chance to convince them to grant your request for funds. At the same time, you can explain your financial situation which might soon persuade them to decide in your favor.
  • Prepare the requirements ahead of time, especially your income tax returns for the past two to three years; certificates of financial capability including your employment certificates and your pay slips for the previous months; certificates of ownership for the properties or assets you possess; and other financial documents. And don't forget to prepare sufficient funds just in case you will be asked to make a down-payment to your lender.

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