Important Things Need To Be Asked While Applying For a Home Loan

We all wish to have a home we can call ours. But with the given real estate costs, it is impractically to buy a house without applying for a loan to cover the cost. There are banks out there that offer loans to prospective customers (considering the credit worthiness) as home loans.

If you have an excellent credit rating i.e. a large down payment to make, no debt to income ratio and you have a steady significant income coming in from a source, you will have no real problem in clearing your home loan from the bank.

What happens if you’re a person with bad credit to your name? Yes, there is a likely chance that considering your credit unworthiness banks will not show interest in lending money to you, but you don’t have to rule out the dream of your future home ownership just because of your bad credit.

There are many types of non-confirming and/or specialist lenders out there who offer a type of mortgage – a bad credit home loan, particularly to those with black mark on their credit documents. These are basically designed for client applications which are beyond the regular and do not meet the bank’s credit guidelines.

How to qualify for bad credit home loan

Bad credit home loans are meant for people who have had a black mark on their credit file because of some bad happening in the process of credit repayment. It is obviously known fact that lenders and banker shy from people who have bad credit and have a history of non repayment of loan in the past. But it should be remembered that home loans do exist for people with poor credit.

A person with a poor credit can increase his chances of getting a loan by:

· The person should make sure that he saves as much money as possible to pay as down payment. Higher the down payment amount, more chance for getting the loan

· A good way could be to improve the credit score, the person should try and pay off the current payments on time in order to reduce the number of credit inquiries

· Check all the sources that can come in handy in case of picking a bad credit home loans. There are lenders and financers beyond the banks that don’t entertain you

So, whether you have a bad credit or you are clean there are certain questions that you should ask before applying for home loan:

· What is the interest rate on mortgage: In order to make sure what you will end up paying over the term of the loan, you should confirm the interest rate on mortgage. This will also help you compare rates with other bankers and financers

· Confirm about any prepayment penalty: There are institutions which will charge you interest on paying the amount of loan before the due period of the loan. These rates differ from institution to institution. So, you should be aware of what the penalties are and how they would be calculated.

· The person applying for the loan should confirm about the minimum down payment

· And the person should thoroughly confirm and know that documents etc that he has to present for the clearance of the loan.

Story by Andrew Cowan, Andrew is a specialist mortgage finance consultant specialising in home loans with bad credit & property finance solutions for investors & borrowers with specialized lending needs.