For many people with bad credit, the label is unfairly
tagged onto them due to past financial mistakes or situations that were beyond
their control. Many people with bad credit think that it is impossible for them
to secure a mortgage and become homeowners, especially in the GTA, where the
cost of living can be expensive. Though major banks and prime lenders are
tightening up their qualifications standards all across the country, many
people with bad credit are still able to get approved with the help of private
lenders. Contacting a mortgage specialist is the first step for people with bad
credit looking to secure a mortgage. A mortgage specialist can help put you on
track to re-establishing good credit very early on in the home buying process. When
you go to multiple sources to apply for credit, each one will pull your credit
report, which can negatively affect your credit score. A mortgage specialist
will pull your credit report only once, using it to find lenders with mortgage
products that are best suited for your financial situation. Mortgage
specialists aren’t just experts in financing homes either, they can help with
debt consolidation, refinancing, and home equity lines of credit.
What Stops Me from
There may be a number of reasons why people with steady income are denied
mortgage loans from prime lenders. Bad credit can stay with people for as long
as 7-10 years depending on the type of default. Sometimes, these labels and
numbers aren’t an accurate representation of a person’s current ability to
repay their loans. Bad credit or poor repayment history is only one of the
reasons people are not approved for mortgages.
Self-employed individuals often find it difficult to secure a
mortgage. Some private lenders have specialized mortgage products for those who are self-employed. For the majority of lenders it is important to be able to document and prove your income.
The self-employed have two methods of claiming income: declared income and
stated income. Declared income is usually averaged over your last two income
tax years, whereas stated income is your reasonable expected income based on
the type and size of your business. Having a reliable co-signer is another way
to increase your chances of getting approved for a mortgage loan.
A lot of people with bad credit are unaware that they will
likely be required to pay a more significant down payment on the home to secure
the mortgage. A person with good credit can secure a mortgage for as little as
5%, however, with bad debt, that percent can rise to anywhere from 10-25%.
Having a substantial down payment ready when you apply for your mortgage increases
your chances of approval.
It is still possible to be approved for a mortgage, even
with bad credit. Contacting a mortgage specialist in the GTA can help simplify
the process for you. A mortgage specialist has the experience, expertise, and
relationships with lenders to save you a substantial amount of time and money.
It is important to understand the current state of your financial standing. To
do so, obtain a copy of your credit report online or via mail today.