Applying for a new mortgage with poor credit, you may be wondering whether or not you can get approved with a bad credit rating and what home loan rates are best. You should definitely start to consider the following points:
– Employment history and salary – poor credit will cause lenders to take more notice of previous employment and current earnings.
– Recent expenditures – lenders will look more closely at your recent spending’s to see if you are meeting bills and provide on time payments.
A common mistake made by first time homebuyers when buying a new home, is buying a home that you cannot afford it is essential to stay within a realistic budget. Owning a home involves more than paying the mortgage. With homeownership come unexpected expenses, extra utilities, rising taxes, etc. Here are a few tips to help buyers avoid borrowing too much for a home.
Stay Away from Expensive Homes
If you tour an expensive home that is listed for sale, more than likely you will fall in love with the home. Sadly, millions of people purchase homes that are priced outside their budget. To avoid the temptation of splurging on a more expensive home, avoid touring certain model homes and open houses. Moreover, homebuyers should shun sneaky realtors who persuade them to bid on larger or more expensive homes.
Find a Good Mortgage Lender
Homebuyers with poor credit will likely use a sub prime mortgage lender. When applying for a mortgage quote or loan, select honest lenders and consider what rates suit you and your lifestyle best. Unfortunately, several mortgage lenders and companies habitually approve loans that are beyond a buyer’s ability to pay. Nonetheless, the majority of mortgage lenders are sincere, and will not approve questionable loan applications.
First time homebuyers may have trouble determining how much house they can afford. Before applying for a loan or beginning your home search, consult an online mortgage calculator. After inputting your income and monthly debts, the calculator will provide a rough estimate of how much you can afford to spend.
Get Pre-Approved Before House Shopping
Shopping for a new home before getting pre-approved is a no-no. For starters, this is the easiest way to fall in love with a home you cannot afford. Instead, consult a mortgage lender and get pre-approved. To pre-approve homebuyers, lenders require information pertaining to income and debts. Once documents are received, they can determine a home price within your budget.
Getting pre-approved before bidding on a home is practical. Regrettably, some homebuyers win a bid, but are unable to secure financing because the home is too expensive. Moreover, pre-approval letters indicate your seriousness to realtors and home sellers. In many cases, this can be a tool for negotiating.