Credit Report Problem Stops Mortgage Approval – What To Do

What to do when Credit blemishes stand in the way of getting approved for a mortgage loan.

Negative entries on your credit report can into the mortgage modification process. If you have had problems with creditors in the past and resulting nonpayments, late payments or delinquent accounts then you really cannot escape the consequences for very long. Even if you have not ended up settling or paying your creditors they will have reported these discrepancies to the credit bureaus and these records have found a way on your credit file. Which means that all future creditors who received an application from you and subsequently pull your credit report in order to evaluate your credit worthiness will see these negative remarks and will be all the more reluctant to approve you for the loan. If this is what is liable to happen with you when you apply for a home loan then you should take images and bold action today. 1st afford to not try to be quiet or hide these factors from the lender because he will find out eventually. It is better to be up front with the mortgage lender and give an explanation for the credits lapses in the past if clear and substantial reasons exist. Many lenders understand that situations which are beyond swamped control such as loss of job or serious illness can arise which can result in problems with the credit history and payment records. If such entries to exist on your credit file and you should ask your lender upfront if they’re going to interfere with your mortgage application and which entries you need to deal with in order to have a better chance of your mortgage application getting approved. This way you will get direct feedback from the lender himself and will know what issues you need to address on your credit file. There are some other ways in which we can deal mortgage approval problems if your credit report is a problem. There are a few ways in which you can combat a poor credit rating and get approved for a mortgage loan.

Seek alternate lenders

I’m not really sure how much luck you will have finding lenders that the with subprime mortgage in today’s market conditions. Most of the lenders that dealt with subprime borrowers closed shop many years back when the meltdown in the real estate industry have. These contenders were known as B paper lenders and are more or less missing from the current market. The price that you have to pay to get approved for a mortgage loan in spite of having a less than shiny credit is that you pay a higher interest rate on your mortgage and maybe even higher origination and closing costs.

Taking help from a mortgage broker

Mortgage brokers are usually in the know how of many lenders and depending upon your need and requirement can match you with the right lender. In this situation where you have the need to find a lender with less stringent underwriting guidelines, a good mortgage broker might know of a few.

Seek seller financing

When the interest rates for investments are high and as well as the rates on the mortgage loans, many sellers take to financing the home loan themselves. Sellers do this when they find that their finding problems in finding buyers for the home. This is somewhat a risky process for seller but some do it nevertheless. When the seller himself finances the loan terms and conditions can be more lax as compared to a mortgage loan from a formal lending institution. If you can demonstrate that you are in a financially strong position today to pay for the mortgage and the seller may be willing to ignore previous records because he is not bound by a set of policies and guidelines as many formal lending institutions are.

Get a cosigner for your mortgage application once again, the solution to having a poor credit rating may be to get a cosigner on your mortgage application, one who has a strong credit history and rating.

Save money and improve your credit

If you find that in spite of everything mortgage lenders are charging you astronomical rate of interest on your mortgage and/or are rejecting application down right then perhaps you should concentrate on improving your credit rating before you apply for a mortgage . Loan. In the meantime you can continue to rent and even save money for our larger down payment that will further help in bringing down the interest rate on your mortgage loan. Use credit responsibly and make regular payments so that in a couple of years time your credit rating is much better than what it was before.