| Persistence is the key working toward getting approved
for a bad credit mortgage loan. There are many factors that
you, as a borrower have control over that can help you get
approved faster and easier. There are guidelines that most
sub-prime lenders go by that, if you know them, can help you
move through the process without getting stuck, unable to
get financing.
If you have a bankruptcy or foreclosure, even if they are
recent, do not despair. Many sub-prime or bad credit mortgage
lenders have what’s called, guidelines for bankruptcy or foreclosure
seasoning. That means that they have a set amount of time
that must go by from the time of a bankruptcy or foreclosure
before they will lend to a borrower. Usually this time is
2-3 years, but many sub-prime lenders have no seasoning time,
which means, if your credit score is above a certain point,
you could get approved the day after your bankruptcy discharge.
Other sub-prime lenders have bankruptcy or foreclosure seasoning
of 6 months or a year. The biggest factor here will be your
credit score.
Sub-prime or bad credit mortgage lenders will look closely
at your credit score. In order to get 100% financing with
bad credit, lenders will usually need to see you have a credit
score of at least 600 or higher. There are quite a few things
you can do to raise your credit score to be above this 600
mark.
Here are a few suggestions:
1. Check your credit report for inaccuracies. Make sure all
accounts included in bankruptcies and foreclosures are reporting
accurately. If they show up as an open collection or unpaid
account, charge-off or something else, this could be unnecessarily
hurting your credit score. It will look like another, separate
credit blemish instead of just the one. Make sure the bankruptcies
and foreclosures are reporting accurately. Make sure accounts
that are paid off, show up as being paid off, or accounts
that are closed, show up as being closed. 2. Pay-off any small
collection accounts or past due accounts that you can. Every
account that you pay off will help boost your score. Once
you have done this, get a letter of notification that the
account is paid off and talk to your lender. Most lenders
have programs where they can, for a $75 fee per item, provide
proof to the credit bureaus that an account has been paid
off and have your credit and credit score appropriately adjusted
within a day or two. This program is sometimes called a “wrap
it up” service. If you are in a hurry to get financed, this
may be worth it to you. 3. Pay down open credit line balances.
If you can even pay down the balances on any open lines of
credit, this will boost your credit score. Your credit score
is lowered when lines of credit are maxed out. You can make
good use of your money by paying down credit card balances
to boost your score.
Once you have used some of these techniques to boost your
credit score, be persistent about contacting and applying
with many different bad credit mortgage lenders. Many bad
credit mortgage loan brokers claim that if they can’t do the
loan, then no one can. That is simply not true. All mortgage
loan brokers have connections with many different lenders
and loan programs. What may be impossible with one, can be
very possible with another broker. If your score is around
600 or slightly higher, you will probably have a pre-payment
penalty. Pretty much all bad credit mortgage loans will come
with a pre-payment penalty. Talk to your lender about the
details of the pre-payment penalty. Find out how long the
penalty will last and exactly how much money the penalty is.
How much is the fine for pre-payment on the loan? This is
an important factor to consider when comparing lenders.
To get a approved for a bad credit mortgage loan, be persistent,
work on your credit score as much as you can to get it above
that 600 mark and apply with or contact many lenders to compare
mortgage loan programs.
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