How Do I Get A Pre-Approved Mortgage Loan With Bad Credit?
Advice on getting pre-approved for a mortgage loan even with bad credit
Before you walk into a bank or mortgage broker with the expectations of starting the process for a home loan, you will want to get pre-approved. Pre-approval of a mortgage loan allows you to see what type of financial situation you will take on if you purchase a home. It will also help you understand how your bad credit affects your loan standings.
The Pre-Approval Process for a Bad Credit Mortgage Loan
Acquiring a pre-approval for a bad credit mortgage loan starts with filling out a loan application to the lender after discussing your financial needs. You need to come prepared with all the necessary documents for a home loan. This includes a copy of your credit report, tax returns, monthly expenses, purchasing contract if applicable, bankruptcy papers if applicable, and an explanation for poor credit. The lender will need to verify your employment history, housing history, financial standing, and credit history.
What Happens After You Are Pre-Approved
Once you have been pre-approved by the lender for a bad credit loan, you will receive documentation showing how much you have been approved for and the standing interest rate for thirty days. Remember, your interest rate may change depending on how long it takes to process your loan. The quicker you get all the necessary documentation to your lender, the easier it is to close your loan in a timely manner.
Fees and Time Frame
Each lender varies. Some may require to pay up-front costs such as appraisal, processing, and closing fees. Speak with your loan representative ahead of time to avoid any unexpected costs. You should expect your pre-approval notification to arrive within a few days after processing. Having a pre-approval allows you greater negotiating power with your lender and sellers.
*Affects pricing. With the No Closing Cost
Option, borrowers finance the closing costs instead of paying for them at
closing. Borrowers who pay closing costs at closing may qualify for a lower
interest rate. Some upfront fees (ex. credit report and appraisal) may apply
and may be credited at closing.
*Refinancing or taking out a home equity loan or line of credit may increase
the total number of monthly payments and the total amount paid when compared to
your current situation.
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