Getting in a property is a big investment and needs a lot of preparation.
If you intend to acquire a property, having a good credit history and an outstanding credit score might be your foremost assets when negotiating with mortgage lenders. On the other hand, having bad credit can significantly affect your loan prospects so when you can hold off until your credit improves, you will be in a far better position to get a mortgage loan.
What if you have chosen to obtain a poor credit house loan? What would you do to boost your possibilities of getting an approval to get the best value?
Consider these guidelines when getting a bad credit mortgage loan.
Prepare the down payment.
If you have bad credit, providing a higher down payment can enable you to lower the cost of your monthly loan payments. Save as much as 20% even if it means waiting for a few more months before acquiring a loan.
Compare bad credit home loans.
You will come across various lending companies that offer bad credit home loans. Doing comparison is the best way to make sure that you will get a reasonable loan deal despite your poor credit. Use the internet to gather loan quotes from at least three or four reputable lending companies. Aside from comparing the rates and fees, don’t forget to check the legitimacy and background of the lending company.
Clean up your credit.
Errors in your credit report can badly pull down your score. The good news is you can have incorrect information and unauthorized charges removed by sending a dispute letter to the bureau that issued your report. It will take 30 days for the credit bureau to complete its investigation on the matter but if your complaint is valid, the errors will be erased from your report and your credit score can go up for a number of points. This step can make a big difference on the loan rates you will get so don’t forget to examine your report before submitting your home loan application.
Use your bad credit mortgage loan to rebuild your bad credit and improve your credit score. How? Boost your score by submitting your monthly loan payments on time. Keep in mind that failing to submit your home loan payment on time will not only affect your credit score, it also puts you in danger of losing your home to foreclosure. Aside from paying your mortgage loan on time, make sure that you pay all your other creditors promptly to rebuild bad credit.
Prepare to refinance.
If you cannot wait until your personal credit improves before applying for a home loan, prepare to refinance your bad credit home loan. As soon as your credit score improves, refinancing your mortgage loan is a great way to enjoy a lower interest rate and to reduce your monthly loan cost. You may need to wait for a least a year or two before refinancing your home loan.