If you have bad credit and want to get a mortgage loan, there are things you can do to get a better rate. Even so, your chances of getting a prime rate are low if your credit score is low. Still, there are mortgage loans with reasonable rates for people with bad credit. As a homebuyer, you need to be willing to look into different loan programmes and lenders. Homebuyers should also avoid doing things that could hurt their chances of getting a loan.
If you want to get a mortgage, don't make late payments.
Even if your credit score is good, it's common to pay a bill late once in a while. Before applying for a home loan, you should have a good payment history with your creditors if you want to buy a house. Mortgage lenders know that sometimes things happen that make it hard to pay bills on time. But if you want to buy a house, you should start building good credit habits right away.
Even if someone has missed a few payments, many lenders will still give them a mortgage loan. Even so, these people pay more. Try to make all credit card and loan payments on time to keep your mortgage rate from going up. If you can, change the way you pay at least 12 to 6 months before you apply for a home loan.
Reduce the number of credit checks.
Some people who want to buy a home make the mistake of letting more than one mortgage lender check their credit. It's smart to look around for a home loan. But if you're looking at three or four different lenders, don't agree to have your credit checked. Instead, request no-obligation quotes from lenders.
Credit checks are not done for quotes. But buyers must give a correct description of the credit. To do this, it helps to get a copy of your personal report online, which does not count as a credit inquiry. When the lenders send in their offers, you can compare them and choose the loan with the best rates and terms. Next, fill out an application for a mortgage loan. To make sure you can get the loan, the lender will check your credit.
Don't get any new credit cards.
When trying to get a mortgage loan, it's important to keep your debt to income ratio as low as possible. It's not a good idea to get new credit lines and try to get a mortgage. For instance, if you buy a car before your mortgage loan is finalised, your ratio of debt to income will go up. This could change whether or not you can still get the loan amount you were approved for. To avoid having to re-qualify for a mortgage loan, don't open any new credit accounts until the loan closes.
