Getting Mortgage Loans with Bad Credit: Three Tips For Application Success

Bad credit is not always the debilitating factor people think. Even when looking for mortgage loans with bad credit, the chances of getting approval is not as narrow as generally thought. All that is needed is for the lender to feel confident they will get their money back.When applying for a bad credit mortgage loan, there are some things that applicants can do to ensure this is the case. It requires some pre-planning and quite a bit of effort, but when trying to secure funding to buy the perfect home, it is well worth it.So, we have put together a short list of tips to follow, which together will enhance the changes of securing an approved mortgage, despite bad credit.Get Your Calculations RightThe first tip to smoothing the way towards approval is to get your calculations right. The chief problem for every loan, not just mortgage loans with bad credit, is knowing where to stop. There is no point in seeking a mortgage that is too big to handle.The key aspect of the calculation is income, and the degree to which existing debt is already account for by it. For example, even someone earning $10,000 per month and with a perfect credit rating will be unable to get a bad credit mortgage loan, is it requires monthly repayments of $1,500 but their existing monthly obligations are already around $8,000.It might seem there is plenty of scope for the extra expense, but the mortgage would bring the monthly outlay to $9,500, leaving just $500 to cover any unforeseen expense. This is too tight for comfort as far as lenders are concerned, with a debt-to-income ratio of 40:60 required for approved mortgages despite bad credit.Show Improved Money ManagementBecause bad credit is a part of the equation, lenders that may be willing to approve mortgage loans with bad credit want to see that every effort is being made by the applicant to change their ways. After all, taking on what might be a $250,000 debt is serious indeed.So, it is important for anyone seeking a bad credit mortgage loan to show the lender they have taken control of their finances. This can be done in a variety of ways, but the most practical is to take out a personal loan to consolidate all of your existing debts. This means that the credit card debt is cleared, any small personal loans are repaid in full and any outstanding bills and repayments are covered.They are all replaced by one debt requiring one payment that is less than the sum of all the separate payments. It is easier to get approved mortgages, despite bad credit, because the monthly obligations are reduced, and the action itself is proactive.Lower the Mortgage SumThe idea that a down payment has no influence over an application for mortgage loans with bad credit is not accurate. The fact is that a payment of even 10% will result in a smaller mortgage sum, and therefore lower monthly repayments. A larger down payment, of perhaps 20%, will reduce the bad credit mortgage loan further.  And just as showing signs of better money management will impress lenders, so will saving a larger down payment improve the chances of securing an approved mortgage, despite bad credit.After all, if an applicant can manage to save $30,000 or $40,000 to make the down payment, then repaying a mortgage loan with bad credit should be no problem to them.