If your credit isn't great, it's not easy to get a home loan. But it can be done, and it's getting easier. Think about the following tips to increase your chances of getting a home loan:
Find a real estate agent you can trust and ask him to help you find properties that have built-in equity based on how much they are worth and how much they sell for. Financing a property with equity built up on top of the mortgage will always be easier and faster than a fixer-upper or something that needs more money put into it right away. After all, equity is almost as good to lenders as putting cash down. Ask your real estate agent and mortgage brokers to help you figure out what you can do in this area.
Tip #2: Think outside of the boardroom box to find more creative ways to get money. If the seller will carry a second mortgage, you might be able to save your down payment in exchange for monthly payments and interest. There are lenders who will give you 100% financing, but the interest rate is a big reason why you might want to save for a down payment on your own for six months instead. The amount of interest you save in the end will more than cover the cost of the contract. You could also look into refinancing it later to get a lower interest rate, assuming that rates keep going down.
Tip #3: Look at how different lenders price their products and what they offer. They may all look the same at first, but if you look closely, you'll see that there are small differences that can make or break your deal.
Tip #4: If you want to get a mortgage, you might want to use an online service that sends your completed application to multiple lenders. By using an online service, your credit score will only be checked once, and you'll be able to see the results and compare lenders more easily to find the best deal.
Tip #5: Think about what you could do to improve your credit score. There are so many easy ways that don't take much time to try that it would be silly not to. But the most important thing to do is to check your credit history online and make a note of any mistakes. Whether or not you try to dispute something small, you should make sure that the report doesn't have anything that shouldn't be there. Think about ways to consolidate your debt if your debt-to-income ratio is out of this world. Also, use some kind of financial planning to help you keep your spending habits under control so that you can pay your bills on time. Your credit can look more stable and loan-worthy if you pay your bills on time and if the number of credit inquiries, like for credit cards or car loans, goes down.
