Bad Credit Home Mortgage Loans – Tips to Increase Your Chances of Success

Most young people have a very carefree lifestyle nowadays. They don’t care much about the future as enjoyment of their youth is a priority. Many even max out their credit cards or take unnecessary loans. As time goes by and when we get older, we are suddenly faced with many challenges and responsibilities.

A typical example is that we get married and are on our way to build a family, so our priority now is to own a place where we and our family can call home. Hence we take a mortgage loan and the first thing the lender asks is, “What is your credit score?” You realize that you have some bad credits and worry if you will be eligible for a loan.

Well, you still could get a home mortgage loan even if you have bad credit. In fact, getting a home loan with bad credit has actually never been easier than it is today. However, there are several things you can do to increase your chances of success. Here are some tips that can help you get that loans:

Shop Around.

Most mortgage brokers understand your situation, whatever it may be. Don’t be turned off by mortgage brokers who tell you that they can’t help you. Many brokers like to say that if they can’t help you, no one can help you. Fret not and persist on in finding and talking to other brokers because there are some brokers who have good relationships with flexible mortgage lenders. Don’t give up until you’ve found lenders that are flexible enough to understand your situation and adjust their rates and charges to accommodate you.

Go Online.

The Internet is a great place to find bad credit home mortgage lenders. It is recommended that you apply online first to mortgage services as they will submit your application to multiple mortgage lenders. Many lenders already have their products and packages posted for you to compare and choose from.

One important thing to consider would be the interest rates. When it comes to bad credit home mortgage loans, you should not expect the interest rates to be low. However, different lenders have different interest rates that are adjusted according to your income, collateral, how bad your credit rating is and the loan amount. Most bad credit home mortgage loans have a maximum term of 6 years only.

Another important consideration is the type of loan that you should be taking, whether it is a secured or unsecured loan. Take note that interest rates will always be lower for a secured loan.

Put More Money On Down Payment.

Down payment will vary as per your credit score, that is, the higher your credit score is, the lower the down payment. If you can make a higher down payment, your interest rate will be much lower even though if you have low credit scores. So, it is advisable that you save some money for a down payment.

How the Government Bailout Can Help You Get an Unsecured Loan

The recent financial crisis may have you feeling that you may never qualify for an unsecured loan again, but fortunately the government bailout has loosened the credit market to allow more borrowers to get the unsecured loans that they desperately need. Although market conditions are fluctuating slowly with each passing day, more and more lenders are gaining the confidence to begin writing unsecured loans that might have been nearly impossible to get just weeks ago.

Credit Freeze Is Melting

Unsecured loans are the least favorite loan among lenders due to the risk that is posed when the loan money to borrowers without having established collateral that backs up the loan in the case of default. For those with decent credit scores, getting an unsecured loan is again possible, although all borrowers can make their application more lender-friendly by dusting off their credit file to make sure they are in tip-top shape.

Dust Off Your Credit File

Take time to check your own credit score before you apply for your unsecured loan. Regardless of previous credit ranking that you might have enjoyed, it is important to stay abreast of any changes that might be noted in your file. You can obtain a free copy of your credit report from all three major reporting bureaus once a year as entitled by law. There is typically an extra charge to obtain your FICO credit score – which is the number that lenders look at when determining your creditworthiness. Knowing your score and the contents of your credit report before you apply is vital.

Check your report for errors that might have been reported mistakenly and file timely disputes to have any incorrect information removed. If there were extenuating circumstances that made you late on a mortgage payment or credit card bill, you have the option of making a notation that can be read by potential lenders that pull your report explaining what happened that made you late. If your FICO credit score is less than 650, you may want to polish up your file before applying for your unsecured loan.

Improve Your Score Fast

Improving your FICO score before you get your unsecured loan can take just a few months when you apply for a secured loan or credit card. A secured loan is a loan that you back up with collateral. Taking out a secured loan in a small amount can actually add a bunch of points in very little time, leading to your approval of a bigger, unsecured loan. A secured credit card is a credit card that is backed up by your deposit in an amount equal to your credit line. Your good payment history with a secured credit card and your wise use of credit can also multiply the points on your FICO score.

You can further your chances for approval of your unsecured loan by applying with an online lender. Online lenders have historically lower rates than a traditional walk-in lending institution because there are many more lenders doing business online than in your area. This means that lenders will offer lower rates to lure customers in and are more likely to write unsecured loan products when others say no.