Applying for a home loan these days calls for some “heavy” qualifications. You must have a low debt to income ratio, able to make big down payments, and have good credit standing. Unfortunately, it can be difficult to maintain a good credit standing, and in some point of your life you might have some delayed payments, which are marked in your credit history. There are also cases wherein loan applicants have suffered bad credit because of a foreclosure or bankruptcy. A bad credit history can easily get your home loan rejected instantly.
All is not lost. It’s a myth that it is impossible to get a home loan if you already have some “red marks” on your credit history. There are many more ways on how you could prove you have the ability to pay for the loan without causing any problem in the future.
If you have been saving for years for a large down payment, then you stand a chance to be approved. Having other assets and reserves can lead the loan officer to believe that you are capable of settling your mortgage. Try to make that loan officer think that whatever bad points you have on your credit history; it’s a thing of the past that you are already renewed.
Showing to the mortgage guy that you intend to stay for a long time on the house you want to buy is also a good ground for an approved application. If you have been residing or renting the same house for years, then make sure you indicate them under your application. The same applies if you have been working with the same company for several years. Better if you could show proof of increased salary over the years. These things would show them that aside from not being a flight risk, you have enough funds to pay for the loan.
Years ago, applying for home loans did not require you to place any down payment. However, today’s story is entirely different because companies do require a down payment based on their assessment. It has been one of the challenges for applicants to come up with a considerable amount for the down payment. Mortgage companies like applicants who show ability to pay by presenting a large down payment fee.
Always have the necessary documents to show that you presently have a good financial standing, that a bad credit history can be set aside since you are not anymore negligent on your financial obligations. Having a stable bank statement over the recent year, or showing proof of bill payments that are paid on time, will most likely increase your chances of having your application approved.
Short to say, it is not true that a bad credit history would hinder any applicant from ever owning a home. It all depends on how you handle and manage your finances in the present. Moreover, having a complete documentation of everything that has to do with your finances is advisable. It’s essential to show proof that you have been saving for years, and have better financial management than before.