The most of the lenders prefer to check your credit history before approving you for a mortgage. A bad credit history will minimize your capability to qualify for a mortgage, as the lenders will consider you at risk of becoming defaulter on the loan. Are you tensed for getting a mortgage? Here we present two part tip for getting a mortgage even if you have a bad credit score.
How to Qualify for a Mortgage Loan with Bad Credit
The first step will be organizing the finance
First of all, you have to accumulate at least the past three years credit score. It is a three digit number and used by the lenders when you place a request from a credit card and a mortgage from a lender.
Now how can you get the credit score?
You can contact your credit card company for getting a free credit score. Do not use online credits score services as many fraudulent activities might happen and it will just hamper your credit history.
The second step is to understand what the point value of a bad credit score is. If you have received 600 points or lower value, it will be difficult to qualify for a mortgage. However, note that the Federal Housing Administration approves mortgage with the credit score between 600-500. Along with the score, you have to show a good income proof, repayment characteristics and the present debt associated with other lenders, before applying for a mortgage. One more thing you should remember that you have to have a steady income for qualifying a mortgage. If you are a salaried person you have to show the payslips for consecutive 1 year. In case, you are self employed you have to show a good consistency on your income value.
Next is to eliminate the existing debts such as overdue charges, late payment penalties, etc. If you have late payment for 90 days, lenders will think about the mortgage and you may not qualify for it. However, if you’re late fine comes across 60-70 days you have a good chance for qualifying the mortgage. You should also be prepared to pay higher interest on your mortgage. Then the lender will be more interested to give your mortgage.
How to apply for a mortgage?
Application of a mortgage is a four step procedure. First of all, you have to apply to the bank for the mortgage. If the bank is not allowing you, you can place requests to the Federal Housing Administration. In that case, you should maintain at least 500-600 credit scores along with the proof of steady income for the past two years. In the next step you should ask your landlord regarding the lease to the own agreement. Remember that most of the contracts are made for 2-5 years. Thus, be prepared to serve the contract for the next 5 years.
Now you have to produce a co-applicant for the mortgage as a security value for the lenders. You have to wait for a period until your credit history gets refreshed, in case you have a bad credit history. Once all the rating becomes good, you can finally apply for a mortgage to the lenders.