If you have bad credit, it can be a bit of a hassle trying to find a mortgage lender. The good news is that you aren’t alone. There are plenty of companies and programs in place to help people with less than stellar credit qualify for a mortgage.
The first step is to figure out what type of loan you qualify for. This means getting a mortgage pre-approval. While this isn’t mandatory, it does give you a leg up on the competition and a lower interest rate. Also, if you have bad credit, you may qualify for an FHA loan. Depending on your situation, you may also be eligible for a streamline refinance.
Another option is to speak with a mortgage broker. A broker can offer you a variety of loans from different lenders, including those for bad credit. They can be a helpful resource in your search and will provide you with some fresh data about the companies you’re considering.
One of the best ways to do this is to check your credit score. You can find your score online or by speaking with a credit reporting agency. Make sure to dispute any inaccurate information. Missed payments or other errors can really hurt your credit rating.
The next step is to compare rates and terms from multiple lenders. LendingTree is a site that aggregates offers from several lenders, making it easy to see which mortgage loan offers are available to you. Some companies will be more flexible than others, but it’s always a good idea to shop around.
For the most part, you’ll need a minimum of 3.5% down to qualify. This is usually the minimum down payment required for conventional mortgages, but you can find lenders who will accept a lower down payment. Having the money in hand to cover the closing costs is also a good idea.
Another thing to consider is your debt-to-income ratio. You may be able to qualify for a more affordable mortgage if your debt-to-income is under 30%. However, if your balance is high, you might not qualify for a mortgage at all.
The best bad credit mortgage lenders will be able to help you qualify for a mortgage with less than perfect credit. Most lenders will also let you know whether you qualify for a free credit score improvement program. These are designed to make it easier for people with less than perfect credit to improve their credit ratings, which in turn, will increase your chances of being approved for a loan.
Choosing the right lender for your needs isn’t as hard as it seems. Check with your local Better Business Bureau and find a reputable company that can offer you a good rate. It’s also a good idea to talk with a friend or relative who has already been approved for a mortgage before you start your search. In addition to helping you find a suitable mortgage, a friend or relative who is already a homeowner may be able to help you co-sign for your mortgage.
