What Do Mortgage Lenders Like to See?
According to real estate experts and performance reports, the property market is showing signs of recovery. However, what this actually translate into is “higher costs for budding homeowners!”. So mortgages remain the only option for the vast majority of people looking to buy properties. You may take this to mean that having a good credit score is more important than ever; after all, getting a mortgage becomes especially hard if you have bad credit history.
People applying for a mortgage with bad credit scores have good reason to be more uncertain about the approval or disapproval of their loan application. However, it would be a mistake to assume that you’re not going to get a mortgage approved just because your credit history isn’t looking all that great. There are several things that lenders look for that can help you get the loan you need to buy your dream home.
Income is certainly an important factor for the lender before giving you a loan but regardless of how much you earn, reliability of employment is more important for lenders, especially for those with bad credit. Therefore, before applying for a mortgage with bad credit, make sure you can prove the reliability of your employment. It is because the lender wants the borrower to repay the mortgage amount without any snag.
For instance, the applicants who have recently started a job get little preference, even if they earn better those who have been working in the same place for months or years. The lender usually demands a letter of assurance from the employer as a proof of long-term employment.
Improvement in credit score
The credit score may not matter a lot for people who are regularly repaying their loan but it says a lot about the loan applicant who has applied for a mortgage for nice homes for sale despite having bad credit score. People making efforts to improve their credit score are highly valuable as it indicates that situation that contributed to a bad credit score can get better. If you want to secure approval for a mortgage despite having bad credit scores then you must take some proactive steps that can improve your credit score.
For instance, to return the old loan before applying for a mortgage, you can take a personal loan to repay quickly and improve the credit score, instantly. These efforts show that you are ready to take a mortgage and committed to repay it without skipping any repayment.
Strong down payments
Out of all practical and positive steps that an applicant with bad credit score can take, the most important one is to make a hefty down payment. It is the most impressive thing for a lender from a borrower’s side. The huge down payment means that the mortgage amount will be automatically reduced. It also means that lesser risk is involved from lenders’ side regarding their money.
The other aspect of hefty down payment is that lenders can trust the borrower for their money. Now it is up to you how you can take proactive steps to negate the impact of bad credit scores on your application.