How to Get a Mortgage with Bad Credit

Are you searching for how to get a mortgage with bad credit? Well … finding a mortgage when you have a bad credit score is not impossible. However, it usually requires the borrower to make a few concessions, such as paying a higher interest rate.

Here are several other tips to help you seal the deal:

Get a stable job

It’s very important that you can demonstrate to lenders that you have a stable income.

Eliminate your debt

By doing this before you apply for a home loan, you’ll minimize your debt to income ratio and make it much harder for your lender to say no.

Save a lot of money

Lenders love borrowers who are willing to put down a large down payment because it means they are less likely to default.

Consider a “rent to own” option

Find a seller who would be willing to accept a contract that sets aside a portion of the monthly rent for the down payment at a later date when your credit is better.

Explain the negatives on your credit report

Believe it or not, lenders may be willing to overlook a poor credit score if they know you had a good reason for paying your bills late — or not at all.

Visit your local housing agency

There are government loans and special assistance programs for people with bad credit.

Find a cosigner

Try to find a family member with good credit who will cosign your loan. Don’t be surprised if they turn you down, however, because they’d be on the hook if you ever default.

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Readers: This is article 19 of 25 from my no-nonsense “Mortgage Basics” quick-reference series.

Photo Credit: GotCredit