Tuesday, March 13, 2007

Poor Credit Mortgage Loans - 4 Things You Can Do To Increase Your Chances of Getting Approved

Just because you have poor credit, it doesn't mean that you can't get a mortgage; you just need to work harder at getting approved. There are several resources available to you and there are several strategies that you can use to increase your chances of getting approved for your mortgage.

1. Completely Fill Out Your Application

This often sounds like common sense, but if you take the time to completely and legibly fill out your loan application it makes it easier for the lender to process the application. If you leave any blanks then the lender will have to call you. The lender will also need to verify all of the information that is on the loan so you must make sure that it is correct and that everything is spelled properly.

2. Offer a Higher Down Payment

The best thing you can do to improve your chances of approval is to have a good down payment. The lower your credit, the higher the down payment will have to be. This may mean that you need to wait a couple years and work on saving up enough money to make a good down payment. If you credit score is below 600, then you are going to need to have at least 5% for a down payment. If your credit is lower, your down payment will need to be higher. A down payment of 20% will help you avoid private mortgage insurance, which will save you a ton of money in the long run.

3. Get Pre-Approved

Pre-approval is always a good place to start. If you have a down payment and you have filled out your loan application you will get a good idea of how much you will be able to spend on a home. Remember, it is very important that the lender treats your pre-approval in the same manner as they would any other lender. You want to be certain that just because you have a low credit score they are not being diligent with your application. Many lenders will issue pre-approvals that are not completely researched and you don't want a false sense of spending ability when it comes to your home.

4. Steady Income

Your income will mean a whole lot, especially if you have a poor credit. Be certain that you have held your job down for a considerable amount of time and that you can show a good, consistent income. Avoid making any expensive purchases prior to buying your home. The new car, boat or other toys can wait until after you have been approved for your mortgage and you are moving into your new home. Making these large purchases will reduce your cash assets and will increase your liabilities. When you go to purchase a home you do not want any unnecessary liabilities.



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