Credit history is the vital part of loan application for any purpose. If your credit history is bad, you are considered a high risk borrower and so it becomes inevitable to compromise on the interest rates. With foreclosures becoming a common occurence, it has become more difficult to get approved for mortgages for poor credit applicants. However, it is not impossible to get mortgages for the purchase of homes even with poor credit history as there are yahoo finance lenders who deal with such loans to realize huge profit. If you do not want to compromise on the interest rates, you have no other way than to wait till your credit score is improved.
Since you are entitled to a free report annually from the major credit bureaus, you can get the report to review. It should be ensured that there are no mistaken entries that affect your score. If you find inaccuracies in the report, you can report to the officials to get them corrected by producing documents that prove your statement.
Bad credit influences the interest rate on the loan and so it is inevitable to pay more towards the interest on the loan if you apply for loan with poor credit score. You might be offered higher interest loans or the loans with adjustable rates. For high interest loans the repayments are obviously higher. As for Adjustable Rate Mortgages, the repayment amount is unpredictable as the interest rates keep changing due to the market rate fluctuations.
If you can convince the lenders of your ability to make repayments promptly, you can get approved for loans although the credit history is not good. Your income proof can be presented to show your affordability. If your earlier default was due to sudden illness or lack of employment, you can mention the issues to let them understand the situation that led to your default. Your current position might make them consider your application.
If your debt to income ratio is not impressive to the lenders, your chances of getting loan approval are remote. It is suggested that you clear your existing loans by means of some other financial sources. You can seek the support of friends or family members to get short term loans till you get your mortgage. You might be helped either with cash or cosigning personal loans. With the amount thus raised, you can settle the loans and then apply for mortgage.
If possible, you can spare additional funds towards down payment which will make the lenders see you a serious person with sincere intention. You will be considered as a responsible person who is capable of saving. There are options of loans guaranteed by the government to support the home buyers. The loan offers from Federal Housing Administration and the offers from Veteran’s Administration are the loan offers which have minimum requirements and maximum advantages.
If you can produce any of your assets as security, you can get loans instantly as the asset that you submit acts as assurance for the loan amount. The lenders can dispose the property set as collateral and get back the loan amount. This offer is much in favor of the lenders and as for the borrowers the property is at great risk.
Any of your friends or family members with good credit can be approached to support you in the process. The co-sign of good credit individuals will help you get traditional loans with lower interest rates. However, it should be remembered that loan default will affect not only your chances of getting traditional loans in future but the one who cosigned the loan for you will be seriously affected.