Mortgage Loan With Bad Credit: Making Approval Fast And Assured

Finding the right new home to buy is not something that can be done over night. More often than not, it takes months of searching to find the property, before the search for a mortgage begins. For bad credit borrowers, the challenge is even greater since securing mortgage loans with bad credit is more difficult.Traditional lenders, like banks, have a poor reputation when it comes to granting loans to bad credit borrowers. Even those that do tend to charge interest rates that are high, and have stricter repayment terms. So logically, securing mortgage approval – with sums a high as $250,000 – is hardly going to be a walk in the park.  But there are ways to increase the chances of approval, and to ensure a mortgage loan that is affordable. It is a matter of dealing with the issues that need to be dealt with, and strengthening the application sufficiently.Start With Knowing Your LimitsIn too many cases, the reason that a bad credit borrower is turned down is that they simply seek a mortgage that is too expensive. It is essential when applying for a mortgage loan with bad credit that the limits of your entitlement are understood. There is no point in seeking a $300,000 mortgage when the figures dictate $200,000 is the most to hope for.What decides the figure that is affordable is not just your income, but the amount of debt obligation that already exists. It is fine to earn $5,000 per month, but if your outgoings are already $4,500, that leaves little extra. So, securing mortgage approval becomes less likely.The factor at the heart of affordability is your debt-to-income ratio, which dictates that no more than 40% of income can be committed to debt repayments. So, if the existing debt repayments can be lowered, the chances of getting the mortgage loan are increased.Strengthen Your CaseThere are two ways to strengthen your application: firstly, by lowering the existing debt and the repayments; and secondly, by providing a large down payment. As mentioned above, lowering existing debts can help in securing a mortgage loan with bad credit because it frees up extra cash to commit to repayments.But how can this be done? Well, the only way is to clear existing debts, and the best way to do this is to take out a consolidation loan and clear them all in one go. This provides two advantages, with cleared debts resulting in increased credit scores, while a restructured loan means the repayments can be lower.A down payment helps in securing mortgage approval because it lowers the size of the actual loan required, which in turn lowers the debt, the interest rate and the monthly repayment sum. If a 10% down payment on a $200,000 home means a mortgage of $180,000 is needed, a 20% down payment lowers the required mortgage loan to $160,000.Consider an Alternative Mortgage ProviderAll too often, bad credit borrowers accept whatever terms are offered to them by traditional mortgage providers because they are thankful to get approved in the first place. But when applying for a mortgage loan with bad credit, there are alternative providers to consider too.Many of them are to be found online, and a quick search on Google or one of the other search engines can result in thousands of specialist bad credit lenders willing to consider applications for mortgage loans. However, it is important that all details of the loan agreement are studied carefully, and that the deal is never rushed into.What is more, even of securing mortgage approval is a reason to celebrate, be sure to check out the reputation of the lender on the Better Business Bureau website. That way the chances of been caught in a scam are lessened.