Home Loans With Bad Credit: Why Pre-Approval is a Good Idea

For anyone with low credit scores to their name, seeking a mortgage is something of a major step. The fact is that securing a home loan with bad credit is not a simple task, with most lenders preferring to avoid the potential trouble. And for those who do get approval, the sum borrowed is often not enough to get the home they wanted.There are options available to these borrowers, however, and despite what difficulties might exist, the solution is every bit as beneficial as it is to borrowers with excellent credit histories. Getting pre-approved mortgage loans is one of those advantages, providing a home hunter with the freedom to seek out the home they want without the fretting that can often surround the application process. The home loan is secured before their hunting begins.The Advantages of Pre-ApprovalIt may seem that securing advanced approval on a home loan with bad credit is committing to something that might never come to be. But all that pre-approval means is that the mortgage provider has confirmed that, when a home is found, that the borrower has already been given the green light to secure the funds necessary.This provides a number of advantages to the home hunter. For a start, they can enter the property market in confidence, fully sure that they have a certain amount of money on hand with which to buy a new home. Without a pre-approved mortgage loan, the borrower would be stifled, confirming interest in a property but then waiting for perhaps as many as 60 days before getting the okay.The other main advantage is that pre-approval makes it easier to negotiate a better price, with home hunters confident on what their budget is, and already armed with confirmation of the home loan funds at their disposal.Beating the Bad Credit ScoreOf course, securing a home loan with bad credit is never a simple process, with the vast majority of mortgage providers being hesitant when it comes to lending such large sums of money to applicants with poor credit histories. But there are ways around this problem too.Getting a pre-approved mortgage loan requires some time and effort, with applicants normally having to wait between 60 and 90 days before getting confirmation on the approved sum. But taking some extra time before hand can greatly increase the chances of approval and the sum approved.Reducing existing debts through a small consolidation loan will see credit scores improved and extra cash freed up, thus helping to increase the size of the home loan that can be qualified for. However, be aware that 6 months is usually needed for a real impact to be made.Approaching the Right LenderGoing to the right lender is hugely important if a home loan with bad credit is to be secured that can be considered truly affordable. While many of the traditional lenders charge higher interest rates, subprime lenders operating over the Internet, charge more competitive rates but offer mortgage packages better suited to bad credit borrowers. They are also much more likely to grant a pre-approved mortgage loan to a sum that is practical.However, the repayment term is usually longer (sometimes 40 years), meaning the overall interest paid is high. But the advantage is clearly in having a greater chance of getting the green light on the home loan, and therefore the greater opportunity to buy the home wanted.