Mortgage for poor credit
If you are planning to take a mortgage loan then the first thing that the lender enquires about is your credit score. Many people do not realize the importance of credit scores but it plays a very important part in a number of things. However even if you have credit problems you can still get a chance to get approved of a mortgage loan.
There are a number of lenders that give out mortgage for poor credit and this can make it possible for people with poor credit to qualify for a mortgage loan.For lenders people with poor credit pose as a high risk and hence, they would charge a higher interest rate. Let us see some of the features of these mortgages.
Things to do before applying
Before you apply for mortgage for poor credit you should make sure that you have checked your credit report. This is your first step towards securing a mortgage for poor credit.If you find any mistakes in your credit report make sure that you report it to the bureau immediately so that it can be rectified.
The second thing that you should check is your debt to income ratio.This is another important aspect taken into consideration by the lender. See how many pending bills are to be paid. Also check whether you are in a financial condition to support making payments towards a new loan.
Another thing that should be put in order is that you should start making payments towards the pending bills before applying for the mortgage for poor credit. This is because the lender would be looking at how your previous payments have been towards the debts and this helps the lender in developing a trust that you would be able to meet with the payment.
Getting mortgage for poor credit
Applying for mortgage for poor credit is similar to applying for any other mortgage.However, you need to be a bit careful when applying for these mortgages. First of all, all lenders do not give out these mortgages. So you should conduct a market survey and find out about the prospective lenders. There are some lenders that specialize is giving out mortgages for poor credit and are known as sub-prime lenders. However, these lenders charge exorbitant interest rates.
With the increase in the number of people falling into bad credit and the rise in demand for mortgage poor credit even conventional lenders have started giving out these mortgages. So looking for these mortgages should not be a problem.
When you take mortgage for poor credit you should be prepared to pay a higher interest rate and follow strict rules of repaying the loan. Besides to ease the process of application you should be prepared with all the documents and information required by the lender.
Lenders require the following documents to process your mortgage for poor credit application:
- Federal tax returns from the previous two years
- W-2 forms from the previous two years
- A recent paycheck stub that shows your name and Social Security number, the name and address of your employer and your year-to-date earnings.
- Documents to show other sources of income, which could include a second job, overtime, commissions and bonuses, interest and dividend income, Social Security payments, VA and retirement benefits, alimony, child support.
- A complete list of your creditors, such as credit cards, student loans, car loans, child support payments, along with the minimum monthly payment and the balances.
- Investment records including mutual fund statements, real estate and automobile titles, stock certificates and any other investments or assets.
- Canceled checks that show your rent payments, or mortgage payments if you already own a house and are shopping for a new one.
Apart from this you are also required to attach a letter with the application that would state the reason for your poor credit and assurance that you would be able to pay off the mortgage payments on time.
Factors affecting rates on mortgage for poor credit
Lenders that give out mortgage for poor credit would review your credit report and also verify the information that you have provided along with the application.The lender also sees your pattern of making payments towards the debts and then proposes a mortgage that would be suitable for you.
The lender takes into consideration the down payment that you are paying to secure the mortgage and the loan to value ratio of the mortgage.You have brighter chances if you can make a higher down payment towards the loan.
Some of the lenders that give out mortgage for poor credit are mentioned below:
Bad Credit Loans & Mortgages:
With them you can borrow up to $1,000,000 with no requirement of equity or paying any application fee. You can contact them at West Coast Corporate, 8391 Beverly Blvd, Los Angeles, Ca 90048. OR at East Coast Branch, 909 Alabama St., Columbus, MS 39702; phone: 877-411-6900.
Mortgage One Finance :
They have separate programs for people with credit problems. You can contact them at 1333 Johnson, San Luis Obispo, California 93401 ; Phone: 805-541-5955.
Old Guard Mortgage and Financial Services:
They offer mortgages to people with damaged credit. You can contact them at 802 N Duke St, Lancaster, PA 17602; phone: 888-735-0809.
Mortgage Financial:
They offer mortgage loans to people with imperfect credit scores. You can contact them at 170 Main St. Suite 108 Tewksbury MA ,01876 ; phone: (800) 659-4663Other Articles
