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By Carrie Reeder
Persistence is the key working toward getting approved for a bad credit
mortgage loan. There are many factors that you, as a borrower have control
over that can help you get approved faster and easier. There are guidelines
that most sub-prime lenders go by that, if you know them, can help you move
through the process without getting stuck, unable to get financing.
If you have a bankruptcy or foreclosure, even if they are recent, do not
despair. Many sub-prime or bad credit mortgage lenders have what’s called,
guidelines for bankruptcy or foreclosure seasoning. That means that they have
a set amount of time that must go by from the time of a bankruptcy or
foreclosure before they will lend to a borrower. Usually this time is 2-3
years, but many sub-prime lenders have no seasoning time, which means, if
your credit score is above a certain point, you could get approved the day
after your bankruptcy discharge. Other sub-prime lenders have bankruptcy or
foreclosure seasoning of 6 months or a year. The biggest factor here will be
your credit score.
Sub-prime or bad credit mortgage lenders will look closely at your credit
score. In order to get 100% financing with bad credit, lenders will usually
need to see you have a credit score of at least 600 or higher. There are
quite a few things you can do to raise your credit score to be above this 600
mark. Here are a few suggestions:
1. Check your credit report for inaccuracies. Make sure all accounts included
in bankruptcies and foreclosures are reporting accurately. If they show up as
an open collection or unpaid account, charge-off or something else, this
could be unnecessarily hurting your credit score. It will look like another,
separate credit blemish instead of just the one. Make sure the bankruptcies
and foreclosures are reporting accurately. Make sure accounts that are paid
off, show up as being paid off, or accounts that are closed, show up as being
closed. 2. Pay-off any small collection accounts or past due accounts that
you can. Every account that you pay off will help boost your score. Once you
have done this, get a letter of notification that the account is paid off and
talk to your lender. Most lenders have programs where they can, for a $75 fee
per item, provide proof to the credit bureaus that an account has been paid
off and have your credit and credit score appropriately adjusted within a day
or two. This program is sometimes called a “wrap it up” service. If you are
in a hurry to get financed, this may be worth it to you. 3. Pay down open
credit line balances. If you can even pay down the balances on any open lines
of credit, this will boost your credit score. Your credit score is lowered
when lines of credit are maxed out. You can make good use of your money by
paying down credit card balances to boost your score.
Once you have used some of these techniques to boost your credit score, be
persistent about contacting and applying with many different bad credit
mortgage lenders. Many bad credit mortgage loan brokers claim that if they
can’t do the loan, then no one can. That is simply not true. All mortgage
loan brokers have connections with many different lenders and loan programs.
What may be impossible with one, can be very possible with another broker. If
your score is around 600 or slightly higher, you will probably have a pre-
payment penalty. Pretty much all bad credit mortgage loans will come with a
pre-payment penalty. Talk to your lender about the details of the pre-payment
penalty. Find out how long the penalty will last and exactly how much money
the penalty is. How much is the fine for pre-payment on the loan? This is an
important factor to consider when comparing lenders.
To get a approved for a bad credit mortgage loan, be persistent, work on your
credit score as much as you can to get it above that 600 mark and apply with
or contact many lenders to compare mortgage loan programs.
Visit here to see a list of our recommended lenders for bad credit mortgage
lenders: www.abcloanguide.com/lessthanperfectcredit.shtml (http://www.
abcloanguide.com/lessthanperfectcredit.shtml).
Carrie Reeder is the owner of http://www.abcloanguide.com (http://www.
abcloanguide.com). ABC Loan Guide is an informational loan website with
informative articles, the latest finance news and lists of recommended
mortgage lenders.
carrie@abcloanguide.com (mailto:carrie@abcloanguide.com)
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