Getting Pre-approved Home Loans With Bad Credit: What Everyone Should Know
The availability of pre-approved home loans with bad credit makes the job of buying a home easier for many bad credit borrowers. But what are the facts that everyone should be aware of?
Pre-approval is traditionally viewed upon as a luxury available to those with large bank accounts and excellent credit. But, this is not some reward granted by lenders to their most prized customers. Securing mortgage pre-approval has significant advantages for the home hunter.
But as with everything else in the lending world, it is not a guaranteed service to anyone seeking a home loan. There are criteria to meet, and qualifying is necessary. But once pre-approved, the task of buying a property becomes much easier.
What Is A Pre-Approved Loan?
The concept of pre-approval is pretty straightforward. Instead of finding a home and then applying to a mortgage provider for the funds, the home hunter gets the funds approved first and then finds the home. And while it might be expected to be more difficult, getting pre-approved home loans with bad credit is just a easy.
To the lender, the process of assessing a mortgage application in advance or in response to finding a property is the same. This is because the mortgage provider is more interested in the financial state of the applicant, and their ability to repay the debt, than the property itself.
What is more, the process of securing mortgage pre-approval is not particularly different to the normal process, though there are some additions. But the advantages to the borrower of getting a home loan approved in advanced can be many, with a greater confidence when negotiating the purchase price, and in securing the property faster.
Securing A Pre-Approval Mortgage
Since the chief use of pre-approval is to be able to confirm to the real estate agent that the funds are available to complete the sale, the lender needs to be confident that that is actually the case. When seeking a pre-approved home loan with bad credit, this means carrying out a detailed examination of the state of their affairs.
There are a number of documents that need to be provided. The first is the lending application form complete with the statement of goals, while another is a copy of the most recent tax returns, and third a detailed list of monthly expenditure. Another valuable document is a purchase agreement for your current home, if that is being sold.
Once these are produced, and the lender is satisfied with them, securing mortgage pre-approval is fairly straightforward. After between 60 and 90 days, they will confirm how much they are willing to lend, the interest to be charged and the term of the home loan. They usually also request a down payment too.
For bad credit borrowers, there is a greater degree of scrutiny of their credit situation and particularly in how that was achieved. Lenders will look over past mistakes in great detail to find out if the applicant was untrustworthy with money or simply unlucky. When granting a pre-approved home loan with bad credit, lenders needs to feel confident that the repayments will not be a problem, now or in the future.
Also, it is only to be expected that the interest rates will be higher, so be prepared for a more expensive deal. But if the term of the home loan can be longer than the larger mortgage can be affordable.
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ABOUT THE AUTHOR
Lara Sawyer is the author of this article. She works successfully as a financial advisor with years of expertise on Bad Credit Loans Guaranteed Approval. She publishes informative articles about Guaranteed Bad Credit Loans, home loans, credit cards, auto loans, business loans and others at http://www.fastguaranteedloans.com