If you have a foreclosure or bankruptcy on your credit report, you can still get a subprime mortgage loan. All you have to do is find the right lender. You can get a mortgage as long as you have a steady source of income. The real issue is whether or not you can get low rates. But there are things you can do to make your application better.
Tips for making your mortgage application stronger
Your credit is mostly hurt for the first two years after a foreclosure or bankruptcy. Even though they will stay on your record for seven to ten years, they won't have much of an effect on your ability to get now rates after that. Instead, lenders look at how you pay your bills and how much debt you have.
In addition to waiting for your credit score to improve, you can improve your chances of getting a mortgage by making a bigger down payment. By adding to the property's value, your risk score and rates will go down. Don't forget that you can always use this equity with a home equity loan or line of credit.
You can also improve your qualifications by paying off debt, selling investments so you have cash on hand, and closing credit accounts that aren't being used.
Your Lender Is Important.
You can improve your home loan application, but finding a competitive lender is one of the most important things you can do to lower your loan costs. Rates from subprime lenders can vary by a point or more, so taking the time to compare loan quotes will save you money.
Almost every lender gives out some kind of subprime loan, so don't forget to look at traditional lenders. To make the best use of your time, get loan quotes on the exact amount and terms you want. With these important numbers, you can figure out which company has the loan for you that costs the least.
Rates on subprime loans tend to be 1% to 2% higher for every 50 points below 650. When comparing sub-prime loans, it's important to also look at the closing costs. Often, a loan with a good-looking rate is more expensive because it has high fees up front. Read the details of each loan quote you get carefully to protect yourself.
