Qualifying for a sub-prime mortgage loan with a foreclosure or bankruptcy in your credit past is just a matter of finding the right lender. As long as you have a regular source of income, you can qualify for a mortgage. The real issue is about qualifying for low rates. But there are ways to improve your mortgage application.
Ways To Help Your Mortgage Application
A foreclosure or bankruptcy primarily affects your credit for the first two years after a discharge. While they will remain on your record for seven to ten years, they will cease to have a significant impact on your ability to qualify for now rates. Instead lenders look at your most recent payment habits and debt ratio.
Besides waiting for your credit score to improve, you can make your mortgage qualifications look more favorable by increasing your down payment. By building equity into the property, lenders reduce your risk score and rates. Remember too that you can access this equity at any time with a home equity loan or line of credit.
Other ways to improve your qualifications are to pay off debt, liquidate investments so you have cash reserves, and close unused credit accounts.
Your Lender Makes A Difference
While you can improve your home loan application, one important way to reduce your loan costs is to find a competitive lender. With rates varying a point or more between sub-prime lenders, time spent researching loan quotes will save you money.
Nearly every lender deals with some kind of sub-prime loans, so include traditional lenders in your search. To use your time most efficiently, ask for loan quotes on the particular loan amount and terms you want. With these relevant numbers, you can determine which company has the lowest costing loan for your particular situation.
Sub-prime loan rates are usually 1-2% higher for every fifty points below 650. It