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Bad Credit Mortgage Loans – How To Get Approved
By: Carrie Reeder
Persistence is the key working toward getting approved for a bad credit mortgage
loan. There are many factors that you, as a borrower have control over that can
help you get approved faster and easier. There are guidelines that most
sub-prime lenders go by that, if you know them, can help you move through the
process without getting stuck, unable to get financing.
If you have a bankruptcy or foreclosure, even if they are recent, do not
despair. Many sub-prime or bad credit mortgage lenders have what’s called,
guidelines for bankruptcy or foreclosure seasoning. That means that they have a
set amount of time that must go by from the time of a bankruptcy or foreclosure
before they will lend to a borrower. Usually this time is 2-3 years, but many
sub-prime lenders have no seasoning time, which means, if your credit score is
above a certain point, you could get approved the day after your bankruptcy
discharge. Other sub-prime lenders have bankruptcy or foreclosure seasoning of 6
months or a year. The biggest factor here will be your credit score.
Sub-prime or bad credit mortgage lenders will look closely at your credit score.
In order to get 100% financing with bad credit, lenders will usually need to see
you have a credit score of at least 600 or higher. There are quite a few things
you can do to raise your credit score to be above this 600 mark. Here are a few
suggestions:
1. Check your credit report for inaccuracies. Make sure all accounts included in
bankruptcies and foreclosures are reporting accurately. If they show up as an
open collection or unpaid account, charge-off or something else, this could be
unnecessarily hurting your credit score. It will look like another, separate
credit blemish instead of just the one. Make sure the bankruptcies and
foreclosures are reporting accurately. Make sure accounts that are paid off,
show up as being paid off, or accounts that are closed, show up as being closed.
2. Pay-off any small collection accounts or past due accounts that you can.
Every account that you pay off will help boost your score. Once you have done
this, get a letter of notification that the account is paid off and talk to your
lender. Most lenders have programs where they can, for a $75 fee per item,
provide proof to the credit bureaus that an account has been paid off and have
your credit and credit score appropriately adjusted within a day or two. This
program is sometimes called a “wrap it up” service. If you are in a hurry to get
financed, this may be worth it to you.
3. Pay down open credit line balances. If you can even pay down the balances on
any open lines of credit, this will boost your credit score. Your credit score
is lowered when lines of credit are maxed out. You can make good use of your
money by paying down credit card balances to boost your score.
Once you have used some of these techniques to boost your credit score, be
persistent about contacting and applying with many different bad credit mortgage
lenders. Many bad credit mortgage loan brokers claim that if they can’t do the
loan, then no one can. That is simply not true. All mortgage loan brokers have
connections with many different lenders and loan programs. What may be
impossible with one, can be very possible with another broker.
If your score is around 600 or slightly higher, you will probably have a
pre-payment penalty. Pretty much all bad credit mortgage loans will come with a
pre-payment penalty. Talk to your lender about the details of the pre-payment
penalty. Find out how long the penalty will last and exactly how much money the
penalty is. How much is the fine for pre-payment on the loan? This is an
important factor to consider when comparing lenders.
To get a approved for a bad credit mortgage loan, be persistent, work on your
credit score as much as you can to get it above that 600 mark and apply with or
contact many lenders to compare mortgage loan programs.
About the Author:
To see a list of recommended bad credit mortgage loan companies online, visit
this page: www.abcloanguide.com/lessthanperfectcredit.shtml. Carrie Reeder is
the owner of ABC Loan Guide. It is an informational loan website, with
informative articles and the latest finance news. |
