Many investors have presumed that a bad credit report will not help them to get mortgage; but that’s not true. DC Fawcett has written about how to get financing even with a bad credit score in this article.
- Investors should have a positive mindset that their loan will be approved. There are some exceptional lenders who will review your credit report and financial overview. These lenders may sanction you a loan. These lenders are called non-conforming lenders.
- The investor should put some extra effort and improve their credit score and try to pay all their debts which are due.
When do you say a credit score is bad?
- Arrears is called missed payments, the lender will pay most of his attention on the number of missed payments.
- Relationship with lender should be good and cordial in the past; if there was some bitter experience he may not approve loan.
- Unpaid bills or tax is documented; these are not mentioned in the credit file.
What does a credit file contain?
- Name
- Date of birth
- Address of the borrower
- Loans availed last 5 years
- Negative history against your file if any
The following are the ways to get financing with a bad credit score
- Credit file: Take your credit file to the lender to know his opinion. A credit file will have the current credit limit information, outstanding dues, number of credit cards you own, and late payment report.
- Make sure that your existing debts are paid on time and curtail yourself from applying for new loans. You can re-modify the already existing loan plans in such a way that you can make payments on time.
- Visit a licensed mortgage broker to discuss how the loan can be processed; what type of loan will be applicable in addition to the outstanding dues. These brokers who are having wide knowledge about real estate will help you out on how to get your loan approved with a bad credit report.
- Now it’s time to visit non-conforming lenders who are concerned in giving loans for investors with bad credit score alone. They scrutinize your report to know how long you had been affected by bad credit score.
- Bad credit score may be due to a life event that has traumatized the investor. The lender will help you in providing loan which will be applicable as per your credit report.
The consolidated loan debts like credit card payments or personal loans should be separate from mortgage loans. The rate of interest differs as well as time period to repay the debt.
The investor should review whether he is getting better home loan deals over a period of time, otherwise refinancing is a bad option. HELOC schemes are not ideal for these types of investors as there is a liberty to withdraw money in lump which will make the investor to spend the money.
Conclusion:
To know more about credit score and how to prevent from scammers who pretend themselves as mortgage lender are mentioned in the next article and you can check out in DC Fawcett virtual real estate investing club.
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