Getting a mortgage can sometimes feel like it’s a never-ending process that you can never seem to get out of. It all starts with filling out an application, and the entire process can seem like you’re just getting started, when the truth is that you’ve been applying to banks for years, and you’ve probably been denied several times. So why do so many people end up getting a mortgage rejection? The most likely reason is that they don’t have enough available income to be considered a good candidate for a mortgage loan.
Mortgage loans are basically loans that are backed by a certain amount of property (sometimes called collateral). An online mortgage calculator can be a good starting place, but in reality getting a mortgage is actually a much more complex process. Your overall financial life will affect lenders decision on whether or not you’re a good candidate for a loan, and not just your personality. And even if you do qualify for an FHA, or first-time home buyer program, your interest rate and monthly payments will most likely be much higher than someone who doesn’t qualify. Unless you have the funds to purchase a full house, you’ll still need an adjustable-rate loan to consolidate debt and make home repairs.
You should always start looking at your credit report and working on any negative listings. If you have three or more bad listing items on your credit report, contact the three reporting agencies immediately and request that they remove the bad marks from your credit report. Typically this only takes a few days and will help you qualify for a better interest rate. If you don’t remove them yourself, don’t hesitate to contact the lender and let them know that you didn’t get a response to your request for an item removal. This will definitely start the ball rolling to get your mortgage approved.
It’s also very important to keep your credit score above 600. This is the industry standard, and it will significantly improve your chances of qualifying for a lower interest rate, and more favorable terms on your new mortgage. If you happen to have a low credit score, however, it’s not impossible to find competitive mortgage rates and terms.
There are several options for getting a mortgage. The most popular is to apply for a conventional loan from your local bank or credit union. Most traditional lenders require a complete and thorough credit history report. They will look at your payment history with other lenders as well as any delinquencies on loans you may have held in the past. If your credit score is above 600, this will definitely help your chances of qualifying for a competitive home loan.
If you don’t have good credit, or a good credit score, there are several online mortgage lenders that will allow you to apply and submit an application online. Your application will then be reviewed by a professional mortgage lender. Depending on your circumstances, you could get your loan approved, or your lender could decline your mortgage application. The important thing is that you do your research and make sure you’re getting a competitive rate and terms. While the Internet does make the process of getting a mortgage easier and quicker than ever before, you should still compare rates from at least three different mortgage lenders before accepting a mortgage loan offer.
As mentioned above, most lenders only check your credit score, so if yours is bad, don’t worry. You still have some other options. Some lenders are beginning to offer bad credit mortgages and loans. These are usually called “sub-prime” mortgages. These types of loans are geared specifically for people with less than perfect credit scores. While these types of subprime mortgages have their advantages, they often come with high interest rates and other costs.
The most common option for bad credit mortgage pre-approved loans is to go through a “bad credit specialist.” A good idea if you’re not interested in going through a lender, is to find a good mortgage broker and see if they can get you pre-approved. While it’s not a free service, it’s still fairly easy to find a good broker and get pre-approved. If you don’t have a good enough credit score to qualify for a standard mortgage, then you may want to consider this option. For some borrowers, this option might be their only option.