How to Get a Mortgage With Bad Credit

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Obtaining a mortgage with bad credit takes a little bit of planning and work, but the results are getting the home you’ve been waiting and working for. Many people feel like giving up when they get turned down for credit reasons. The fixes aren’t always difficult, but they might take some effort and time. If you want to get a mortgage, it’s worth going the extra mile to get the job done.

Make Credit Repairs

One of the first things you need to do when you have poor credit is to get your credit score up by repairing what you can. You won’t start to see immediate results, but you need to just dive in and start getting it done. First you need to have a copy of your credit report. There are three different reporting agencies. Check through all of the listed creditors and make sure that they are debts that you actually owe. You can dispute any that aren’t valid. Next you’ll need to contact the creditors you can afford to pay off right away. Make payment arrangements with as many as you can to clear off your credit report. It will begin to bring your credit score up and make it easier to get a mortgage.

Document Everything

You’ll stand a much better chance of getting a mortgage with bad credit if you document all sources of income with W2′s and tax records. Income that you fail to pay taxes on isn’t really helpful, since they will base decisions on your taxable sources of income and assets versus your debts. Collect all paperwork that shows ownership to land, homes, cars and provide savings account information, stocks, bonds and life insurance papers. It’s all about showing that you have ways to pay the mortgage if you get laid off or fired from your current job.

Pay Your Obligations

Make it a priority to pay your bills on time. Late and slow payment history will make it even harder to score a mortgage with bad credit. The goal is to develop a pattern of bill payment that makes it comfortable for a lender to offer you the loan. Maintaining the same job for at least a year helps as well. They look for stability in finances.

Reduce Your Overall Debt

Begin to pay down your credit cards and reduce the amount of debt that you owe. You should avoid maxing out credit card limits. Keep it down to 25 percent of the limit or less and pay it off each month. The less your extraneous debt is, the more likely it is that you will get a mortgage with bad credit. It will also help you keep more liquid cash available to pay down even more debt, or make payments on time.

Final Thought

Making positive plans to do the things necessary to get a mortgage even when you have bad credit is the right step to start the process. Maximizing income and minimizing debt is the goal. Getting and keeping your credit score healthy is one of the most important things you can do for your financial present and future. It will not only help you get the mortgage you need, but it will relieve you of the problems surrounding debt collections.

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