How to get Approved for a Bad Credit Home Loan
Because many lenders follow a set of approval criteria for borrowers, it’s not easy to borrow money for a home loan when you have bad credit. However, there are some important things you need to follow to get bad credit home loans.
You should understand that banks or lenders favor borrowers with stable income — stress it to your lender that you have job stability to qualify for the finance. If you are working in an industry — emphasize your tenure of employment to your lender, substantiate it with proper documentation like salary slip and employment experience certificate and if you have received annual merit-pay hike recently, mention it in your application form. Things like this collectively help offset bad credit.
If you live in a rented house or apartment, tell your lender that you have been regular rent payer to your landlord. Substantiate this with proper documentation including those bearing signature of your landlord. This will help your lender understand about your consistency in making payment against dues and liabilities.
If you are not aware what your credit score is, you should study it carefully — it will help you understand true picture of your financial status. Knowing your credit score will help you understand whether or not you can qualify for the mortgage. If your credit score is low, expect to obtain your home loan at higher interest rate.
Most lenders become skeptical at borrowers with very poor bad credit. In that case, logically explain to your lender that your bad credit is the thing of past. If your saving habit is impressive, it would be saving grace for your bad credit. Prove with sufficient documents to your lender about your saving habits. Your saving account will be very helpful for you to obtain a bad credit home loan.
Do not tell your lender that the home you wish to finance will be used for temporary stay. It will make your lender being skeptical on your credit worthiness. Probably, your motive will prompt the lender charge higher interest on housing finance, or your home loan application may be rejected.
To get bad credit home loan, you should increase your down payment by 10% of the entire loan — the larger it is, the quicker you will receive an approval.