Buyer Tips: Obtaining A Home Loan With Bad Credit
If you have bad credit due to bankruptcy or foreclosure or if you have been previously turned down for a loan, you may think obtaining a Warner Robins home loan will be impossible. Fortunately, this doesn’t have to be the case. In fact, with a little research and hard work, you can highlight the “compensating factors” that will help lenders see that you are less of a risk than they might think. Here’s a look at seven compensating factors that you might want to submit with your home loan application in order to increase your chances of being approved for a loan.
Highlight Your Other Assets
If you do not have a large amount of money saved up for a down payment, you can still show the lender that you have substantial financial assets available. You can do this by listing the value of your whole life insurance policy, your 401(k) and other retirement accounts. By highlighting these assets, you help the lender see that you have the money available if you are unable to make your payments.
Demonstrate Job Stability
If you have been working with the same company or within the same industry for several years, be sure to point that out on your loan application. Keller Williams Realtor Josh Anderson further illustrates, “If you have received regular pay raises, such as annual merit-pay increases or cost of living adjustments, you should point this out as well. The same is true of regular bonuses.” In other words, demonstrating that you are likely to receive future increases in income will help offset the lender’s concerns about possible increases in property taxes, utilities and other expenditures.
Show You Have Discipline
By saving money in a savings account or by contributing regularly to a retirement account, you can demonstrate to the lender that you have the discipline, stability and consistency to responsible with your home loan.
Stay in One Place
If you have remained in the same home for at least three years, be sure to highlight this fact on your loan application. Lenders want to know that you won’t be a flight risk and that you can commit yourself to a home or community. By demonstrating that you can stay in one place for a period of time, you can increase your chance of gaining approval for a loan.
Save a Large Down Payment
While it is possible to obtain a mortgage loan with a down payment of as little 3.5 percent if you get an FHA loan, you will significantly increase the lender’s confidence in your ability to repay a loan if you save a much larger down payment. Generally speaking, you should save at least 10 percent of the home’s cost for your down payment, but you will increase your chances of being approved if you save well beyond this amount. If you can’t come up with all of the money on your own, look into the down payment assistance programs that may be available in your area.
When choosing the home that you want to buy, be reasonable in terms of how much you can afford. You may have to start off with something that is a bit smaller than what you want, but you can always move up to something bigger and better later.
Back Your Claims
Simply telling the lender that you were never late on rent or other obligations is not going to be enough to get your loan approved. Instead, bring proof to back up your claims. This may be in the form of bank statements, canceled checks and receipts.
About The Author – Deb Henne writes for realestatemkting.com, drawing from her numerous years of experience as a real estate agent.