How to Qualify for a bad credit mortgage
To Qualify for a bad credit mortgage institutionally, is no easy feat these days. Continued changes and tightening guidelines makes qualifying more difficult, but there are things you can prepare to help you through the process. It all starts with an understanding of bad credit ratings, as well as what lenders consider when assessing bad credits prospects for a mortgage loan. For starters, bad credit applicants need at least a 500 credit score and must have verifiable income. This means Alternative B lenders need proof of income from various sources. Child tax credit, support payments, pension, disability payments, as well pay slips. Secondly, bad credit mortgages usually require greater down payments than conventional mortgages. The amount will vary on the price but is typically 20 percent. Property and location could increase the down payment required. If you are refinancing instead, you must have at least 20% equity in your home. With institutional B financing you will need to pass the stress test. It is a calculation of debt service ratios based on 2% above contract rate. Also with bad credit mortgage applicants should choose shorter loan terms because they will come with lower interest rates. During this period repairing and rebuilding one’s credit will help to requalify mainstream. With the right attitude and a bit of research, it is possible to qualify for a bad credit mortgage and make your dream of homeownership come true. Here you can review current Alternative B lending rates.
Preparing yourself ahead of time by obtaining a copy of your credit report is a very good idea. It will allow you to see what the potential issues are with credit. This will help you to get prepared to provide details of your past or present credit issues. Make notes about the various issues you have had and share them with your broker. As you will see later in this article, there are specific things you can do with these credit issues to help the approval process and improve lender’s assessment of your risk.
Once you have identified a suitable broker for your needs, it’s important to ensure that you are fully prepared with the necessary documents so that you can get approved for your mortgage. These documents include: proof of income, bills related to existing debts, copies of bank statements, and tax returns. Lenders will require identification as well. Additionally, lenders require an appraisal report that evaluates the value of the property being purchased or refinanced. The more documentation you provide upfront the smoother and quicker is the process. In addition consider providing your broker with written explanations as to reasons and causes of your credit issues. Also describe what actions you have done and planned to repair credit and to avoid same mistakes again. Lender love to hear stories and it increases the chances of approval.
Once you have obtained all the necessary documents and filled out a loan application, you broker should provide you with several offers to choose from . This can help ensure that you find the best possible rate and terms. Although bad credit mortgages may come with higher interest rates than conventional mortgages, there are ways to get competitive deals. Working with a reputable, experienced mortgage broker will help to achieve better pricing. Keep in mind also that fees are part of sub prime financing. You will need to consider and compare the costs when evaluation various options.
Canadian Mortgage Finder has been providing online mortgage services since 2003. The are especially experienced in the residential B lending space. They are easily assessable by phone or email.