Friday, May 4, 2012

Securing A Home Loan Online With Bad Credit: What Makes It Happen

There can be no doubt that securing loans over the Internet is the most cost-effective way to do so. Not only can everything be done in the comfort of your own home, but the best deals are found there too. So, it only makes sense to apply for a home loan online with bad credit. The chances of success are highest.

That is not to say that securing mortgage approval can be guaranteed. There are still strict criteria to meet. But, since online lenders are recognized specialists in bad credit lending, the chances are still better than going through traditional mortgage providers.

So, what is the secret to getting the green light when applying for a home loan over the Internet? It is actually the same as with any other loan. It comes down to establishing that the mortgage is affordable, but doing this is reliant on three key areas.

1. Paying A Sizable Down Payment

Normally, a down payment is about 5% to 10% of the purchase price, but paying a larger sum helps in securing a mortgage. When it comes to getting a home loan online with bad credit, it is just as effective, since the overall debt is lowered too.

The reason for its effectiveness is pretty straightforward. Basically, the smaller the required mortgage, the lower the debt and, consequently, the lower the monthly repayments. A down payment reduces the size of the required mortgage, so the larger it is the lower the mortgage sum. So, mortgage approval online is easier to get.

When filling out the online application form, just enter the figure in the appropriate box before submitting to notify the online lender of the size of the down payment. Getting the home loan then comes down to a number of other aspects.

2. Status of Credit Rating

There is no getting away from the fact that a credit rating does have a minor influence on proceedings. It may not prevent an application from succeeding, but because it decides on the interest rate to be charged, it can have negative impact. When applying for a home loan online with bad credit, this is important to keep in mind.

It is well worth the effort it takes to improve your credit score, for a number of reasons. First of all, the weight of debt is lowered; secondly, the debt-to-income ratio is improved, freeing up more cash to meet repayments with; and thirdly, the mortgage provider is impressed by the financial discipline required.

However, it also requires a lot of planning, and for the applicant to take action a long time in advance if enough is to be done to help secure mortgage approval online. The best move is to take out a consolidation loan to replace the multiple debts with a more affordable single loan. When that is done, the home loan is more affordable and approval is much more likely.

3. Proving Employment Status

A third key aspect when trying to secure a home loan online with bad credit is providing confirmation of your employment status. It should be both stable and gainful. Basically, that your full-time job is safe and reliable, and that the income is large enough to cover the repayments.

It is effectively impossible to get a mortgage approval, online or otherwise, if the applicant has not got a full-time job. Even well-paid consultants on short-term contracts can find it very difficult to get approval because the mortgage can be 30 years, and lenders need know the repayments are affordable for that period.

This can take a lot of time to establish, but if your employment is full-time (not contract) and has been held for at least 6 months, your home loan application may be successful.

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