7 Bad-Credit Home Finance Tips
The purchase of a home is usually the largest purchase that the average person will make during their lifetimes. When setting out to do something as important as buying a home, it is smart to seek all the help and advice you can get. It only makes sense that knowing about the process in detail can pay off handsomely in the form of a securing for yourself the best-possible deal.
The adventure of home-buying is made all the more challenging if you have a bad credit score. The credit score that each person carries around with them has a significant impact on the types of loans for which they can qualify – as well as the interest rates they will qualify for.
Having a bad credit score (below 600) means having to fight an uphill battle when it comes to landing a good deal on a loan. But, it can be done. Again, self-education is key to making that happen.
If you are looking to secure a first mortgage even though you have a bad credit score, here are 7 bad-credit home finance tips:
1. Get realistic about the home you can afford:
It stands to reason that the less you borrow for your mortgage, the better your chances of qualifying for a favorable rate on a home. If you have a bad credit score, you will need to adjust your expectations in terms of the kind of home you can afford at this point in your life. Do yourself a favor and take another look at the homes you have been looking at. Consider going for something at the lower end of the price range.
2. Put together a healthy down payment if you can:
Similarly, having a good-size down payment will help you reduce your chances of getting rejected for a mortgage loan. The more you can save now, the lower your mortgage payments will be and the better your chances of qualifying for a great rate.
3. Arrange and organize all of your important financial documentation:
Next, gather together and organize all of the important documentation about your financial history, including: W2 forms, paycheck stubs, bank statements, and even employment resumes.
4. Talk to friends with bad credit to find out which lender(s) they used:
Start getting together a list of bad credit mortgage lenders that your friends and family have used to get their homes. Talking to people you already know is a great place to start when compiling your list.
5. Compile a list of other poor credit mortgage lenders:
Add to the candidate lender list you got from friends and family (above) by doing some online research to find bad credit mortgage lenders. These lenders specialize in helping you get funded even though you have a low credit score.
6. Tirelessly research at least 5 of these lenders:
Next, spend at least 15-20 minutes per candidate lender and do your homework. Peruse their websites and look at online discussion boards. Find out what other borrowers are saying about them.
7. Apply to at least 3 of them and get pre-approvals:
Be sure to apply to at least 3 of these lenders. Remember, for each new one you apply to you are improving your chances of qualifying for an even better interest rate.
Consider these 7 bad-credit home finance tips as you find yourself the best deal on a first mortgage loan.