What Is Involved in Bad Credit Mortgage Approval?
The process for bad credit mortgage approval is not necessarily much different than the mortgage approval process for individuals who have good credit, as it typically involves an assessment of a potential home buyer's financial situation, credit score, and the cost of the desired home. What may be different is that the approval process may require a borrower to put up more money as a down payment or participate in a mortgage loan program that requires him to participate in additional housing counseling and education. Some programs may also limit the amount of money that can be borrowed and may require a more vigorous appraisal process for the home to ensure that an individual with bad credit is not making his problems worse by buying a home that will require costly repairs and maintenance.
It is typically a good idea for someone with questionable credit to first seek out mortgage pre-approval before going home shopping, as it can be difficult to get bad credit mortgage approval. In the mortgage pre-approval process, the potential borrower allows a lender to thoroughly examine her finances. The lender will likely request the borrower's credit score, and if the borrower lives in a country where there is more than one credit bureau, the lender will probably request credit scores and reports from all pertinent bureaus. The lender will also want to know how the borrower intends to both make her mortgage payments and come up with a down payment, which may be very high in situations where an individual has bad credit. In some cases, the lender may be able to recommend special mortgage programs, which may be sponsored by government agencies to individuals who have credit problems.
Once an individual has secured bad credit mortgage approval, he can begin to look for a house or condominium that suits his needs. After selecting the home, it is time to actually complete the bad credit mortgage approval process by finalizing the mortgage loan. At this time, the lender may again evaluate the borrower's financial situation for any issues that have come up since the initial pre-approval. The buyer will also be expected to obtain an appraisal on the home, which can vary in rigor according to the standards of the lender or the agency that will be guaranteeing the mortgage. The lender and agency will review his financial information and the appraisal, and he'll be able to purchase his home if these are approved.
Discuss this Article
Post your comments