We all make mistakes and some of these mistakes could be financial mistakes that have caused your credit rating to plummet or even forced you into bankruptcy. Now you're in the position where you need a mortgage so what do you do? Don't be discouraged, there are lenders who specialize in lending money to people with bad credit histories. Here are some steps to take when you apply for a home loan with bad credit:
Your credit rating Your credit score can have a serious impact on your mortgage so request your credit report and work through it with a fine tooth comb. Correcting even a single simple mistake on your credit history could potentially save you money when applying for a low rate home loan and make you a better prospect.
Income - It's important that when you meet with your lender that you demonstrate your efforts in turning over your new leaf. Share what your willingness to make right what you've done wrong in the past. You can do this by showing them that all your credit cards and outstanding bills are paid off or carry very low balances. Don't have applications for new credit as this will make lenders very suspicious about your risk factor. You will need a steady income source so quitting or changing your job is a definite no-no.
Price It's very unlikely that a lender will issue a mortgage for a home that you can't afford. Figure out your debt to income ratio to get an idea of how much you can afford monthly. Remember that interest rates are a factor in your monthly payments and they may rise so consider your options such as locking in your mortgage.
Down payment The more of a down payment you make, the less of a risk you'll look in the lenders eye and the greater your chances are of getting approved. Because you have so much invested in the property, you'll most likely not default on the loan. Factor in the all other fees such as closing costs.
Once you fill out the loan application, be sure to review the terms so there are no surprises later. Always stay on top of your payments and create a great rapport with your lender!
For more valuable information and tips, visit www.prudentcreditrepair.ca