Before we go into how a bad credit rating could affect you to get a mortgage, let us understand in the tiniest of nutshell what a mortgage is. A mortgage is a loan taken to buy a house or a property. Here an individual signs an agreement with a bank where he receives cash and repays the amount in installments with a certain amount of interest. However, there are times when the unpredictability of finances in our life sets in and though we need a mortgage, we might not get one owing to bad credit mortgages. There are many who have a very bad credit rating and yet they need a mortgage. Obviously, having an unimpressive credit rating will deter your chances of getting a mortgage. The reasons could be many ranging from non-repayment, delays in making payments etc. However, in today’s day and age, it is indeed possible to get a mortgage to provide you take the loan from the right lender.
Let us see how bad credit mortgages could destroy your dream of owning a house:
- As mentioned above, if you haven’t paid your monthly installments in time or you have not paid them in any manner or form, your credit rating will be dismal.
- Secondly, if you are a new borrower, you will not be able to show it to a lender that you are capable of paying off the loan in the given installments.
- Thirdly, you might have a criminal record or a judgment against you that goes on to show how unreliable you would be in case you are given a loan.
With the advancements in technology, you always have an option to keep track of your credit score and then apply for a mortgage. In case your credit score is not up to the mark, you always have the option of consulting a professional and be advised. Needless to say, there are plenty of credit score checkers today and you as the citizen of the country have all the rights to check your credit report. The report also cites reasons why your credit score went bad.
The lender apart from looking at your credit score rating will also try to understand your finances better. You might be asked to submit your payslips either from your present or previous employer such that they are able to gauge from it that you are in a condition to pay back the loan. Here when asked about any debts, you need to be honest and furnish whatever information there is. It is advisable that you pay off these debts before applying for a mortgage because at the end of the day you need to prove yourself to be reliable.
Bad Credit Mortgages definitely jilt your spirits in getting a house of your dreams, but with the right kind of lender, you can rest assure that most important aspects will be taken good care of. Be as honest as possible to prove that you are not unreliable and are in a position to repay the loan in the given time frame.