Mortgage Loans With Bad Credit: How to Improve Your Chances of Approval

Believing that the chances of getting a loan approved with bad credit are no different to when having excellent credit ratings is foolish. While bad credit never rules out approval completely, it does have an influence. What this means is that getting mortgage loans with bad credit is possible so long as the application is strong enough.Times have changed, and while traditional lenders might once have looked set to turn such applications down, there is now a willingness to accept the extra risk. However, there are still conditions to meet, and as a result, there are ways to improve the chances of securing fast approval. After all, low credit scores can be improved, thus making an application stronger.This is an important fact to remember when considering applying for a mortgage loan despite a low credit rating being part of the equation. In fact, there are three areas that can make a real difference.Get Your Debts In OrderWhatever the specific reason for a poor credit rating is, getting mortgage loans with bad credit is only made difficult when lenders suspect those reasons have not been dealt with. So, showing them that matters have been put right, and efforts have been made to take control of existing debt, is a big plus.Arguably, the most logical way of doing this is to take out a consolidation loan with which to pay off individual loans. With the different interest rates and repayment schedules coming from the numerous loan agreements, the cost can be excessive. But by replacing everything with one more manageable loan, the matter is controlled and extra funds are often released.The positives can be so great that securing fast approval becomes much more possible (though not guaranteed). And even if one large personal loan cannot be secured for the purpose, the possibility of a series of smaller payday loans still exists. These may be more expensive, but will mean mortgage loan approval chances improve, at least.Budget AccuratelyCalculating what is affordable is a cornerstone of the a positive application. People seeking mortgage loans with bad credit need to be certain what is affordable, and only then can they properly strategize to improve their situation. Looking for a mortgage of $500,000 is not going to end in joy if neither the available income nor score will uphold the idea.Lenders want to know what debts an applicant is already repaying, as this gives a strong indication of their repayment ability. This is where the debt-to-income ratio comes into play, with the ratio designed to both ensure a borrower does not over-extend their debt, and that the lender is sure of getting their money back. Meeting this ratio makes securing fast approval more likely.Even when an income looks large enough, emergency expenses can cause havoc, so the ratio states that 40% of income only can be dedicated to debts. This is the deciding factor when calculating if even a $150,000 mortgage loan is affordable.Providing a Down PaymentThe fact is that getting mortgage loans with bad credit is possible if the repayments are affordable. A way to lower the mortgage sum required is to make a large down payment. In this way, the principal owed, interest paid and overall monthly repayments are lowered.It may not seem much, but a down payment of $20,000 can mean savings of as much as $150 per month. And while securing fast approval is not made easier, the fact that financial discipline was exercised to save the sum, will impress lenders too. All round, when applying for a mortgage loan, having a large down payment ready is a major plus.