The quick and short answer is yes, you can get a home loan approval with bad credit. With recent economic downfalls and life changing events, your credit may have been impacted by these events. Those with light or poor credit history and those with nearly perfect credit habits can have their credit affected at any point in time. Credit scores take time to improve, but when you need it most it seems to never improve fast enough. Making large long-term commitments are difficult if you don’t have the best credit. Home loans are no exception.
Bad credit mortgages can be challenging, but we can help you get approved for your next home loan in MA, NH or Maine by fixing your credit now. Let’s make it happen so that bad credit doesn’t prevent you from having what you want in your life.
If you are seeking a home loan for bad credit or a first-time buyer home loan, it is definitely possible to get the approval you are looking for. Your best bet is to work on fixing your credit for a mortgage before securing your loan. There are a few simple ways you can begin to get your credit mortgage ready.
- Know your credit: Check out your credit report on your own and dig into the history of your credit, or have a qualified professional at New England Credit Repair handle it for you. We have a credit fix process that includes a deep dive into your credit history and a long-term strategy to eliminate the negative items on your credit report. We will assess what is bringing down your score and will seek to have inaccurate, unfair, or negative information removed. It has worked for many, many people in NH, MA and Maine and it can work for you too!
- Know what’s most important: There are a few items lenders look at when determining an approval, and your credit history and your payment history is at the top of their list. Length of credit, amount of credit usage, late payments, and amount of credit are also important factors.
Debt to Income Ratio is an Important Element to Getting Approved for a Mortgage
Another item lenders will check off their list is the ratio between your debt and your income, or “debt-to-income ratio”. Reducing this ratio will put you in a positive position for a home loan approval, even if you have bad credit or negative credit.
Getting Rid of Delinquent Accounts Is an Important Step for Getting a Mortgage
Your delinquent accounts should be addressed as a part of your debt. Late payments, missed payments, accounts that have been charged off and those accounts sitting in collections need to be addressed and eliminated before applying for a mortgage with bad credit. We can help you get your credit fixed and handle getting rid of your delinquent accounts.
Other important elements in the mortgage approval process
While credit is part of the mortgage picture, other things come into play too, including LTV, payment affordability, income, provability of income, other applicants on the deal, and amount of the down payment.
- LTV (or Loan to Value Ratio): How much mortgage is the applicant looking for in relation to the value of the property? A higher LTV typically makes a mortgage approval more challenging because the lender is incurring more risk.
- Payment affordability: Your mortgage payment needs to be relatively low in comparison to your income. Otherwise, you’re at risk for default, meaning more risk for your lender and a lower likelihood of loan approval.
- Provability of income: You might say you make $X per month, but can you prove it? If not, you might have a hard time getting a mortgage because the lender is unsure of whether or not you actually make the money you say you do. Pretty much every home loan requires proof of income and the lender will typically decide how much payment you can afford based on your provable income.
- Other applicants on the deal: Having a cosigner with strong credit can help your chances of getting approved for a mortgage even if you have bad credit. The lender assumes that, even though you have had credit problems, your cosigner will do everything possible to protect her good credit history and will step in if you are ever having difficulty making your mortgage payment. That said, there are significant restrictions when it comes to cosigners.
- Amount of the down payment: Plain and simple, a large down payment helps the mortgage approval process because it demonstrates that you are serious about the loan and are less likely to walk away when times get tough. It also communicates stability in most cases, because the lender sees you were able to save up plenty of money for a down payment and, therefore, will be able to make the required monthly mortgage payment.
The Way Forward: Credit Repair Before Applying
If you’re planning to buy a house in MA, Maine or NH sometime in the next year or so, you’ve got to try our credit repair and fast credit fix services. They are designed to help people who have a long history of bad credit. Our process will delete and eliminate negative items from your credit report and has worked for so many wonderful people in the New England Area. If you’re interested in learning more, please contact us here. We hope to hear from you soon!