Getting Mortgage Loans with Bad Credit Depends on Three Simple Qualifications

May 25
09:18

2012

Devora Witts

Devora Witts

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Improving your chances of getting approval on mortgage loans with bad credit really just comes down to a few basic qualifications. After that approval is much more likely to be granted.

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Owning your own home is a dream that everyone wants to make a reality. The problem is when bad credit scores are a part of the equation,Getting Mortgage Loans with Bad Credit Depends on Three Simple Qualifications Articles which traditional lenders will point to when they stamp rejection on the application. But it is actually possible to get a mortgage loan with bad credit.The secret is to meet the short list of criteria that lenders stipulate. This criteria is designed to protect them from the risk of defaulted mortgages. And while it is never possible to find a guaranteed bad credit mortgage loan, the fact that qualification is achieve makes the likelihood of success all the higher.For the most part, the criteria list comes down to just three points, so everything should be done to make sure that these are met. Basically, they are proof of employment, the size of the down payment and proof of credit status improvement. Then, an applicant can have every faith in getting their mortgage approved with bad credit.1. Proof of EmploymentThis is a rather obvious, but is especially important when applying for a mortgage loan with bad credit, since the need to prove that repayments will be made is all the more essential. Bad credit, after all, suggests a bad history with meeting debt repayments, and is generally a black mark against applicants.Proving employment is easy, with a photocopy of a pay check all that is needed. This serves to also confirm the monthly salary that the applicant is earning, and once enough to cover the required payment is guaranteed, bad credit mortgage loans are much more likely to be granted.Bear in mind, however, that to get a mortgage approved with bad credit there needs to be enough excess salary to cover any sudden expenses too. This is part of the calculations that the lenders go by.2. Size of the Down PaymentMany people ignore the significance of the down payment, believing it has no bearing on the overall application process. In fact, it is significant when it comes to seeking a mortgage loan with bad credit.For a start, the larger the down payment, the less the size of the mortgage loan required. This obviously means less debt, less in monthly repayments and, usually, a shorter mortgage term.However, the whole process of getting a large down payment takes time and effort. From the point of view of the lender, with the large down payment guaranteed, bad credit mortgage loan repayment should be easily achievable. This in turn makes them feel the risk level is lower and, therefore, getting a mortgage approved with bad credit is easier.3. Credit Score ImprovementThis ties into the size of the down payment, but includes other steps towards an improved credit score. Improvement is obviously of great benefit when applying for a mortgage loan with bad credit because the lender sees that the applicant is making every effort to get their finances in order.While approval is never guaranteed, bad credit mortgage loans are more likely to be granted when the lender is confident that their investment is safe, and their money will be repaid. Logically, a mortgage approved with bad credit has higher risk, but an applicant that has taken steps to improve their status is likely to continue to make progress.Recommended steps to enhance an application for a mortgage loan with bad credit is to take out a series of small personal loans, of perhaps just $1,000. When each is repaid, the credit score improves.Another step would be to take out a larger loan to consolidate existing debt, thus reducing monthly outlays.