Bad credit is a term that frightens most lenders, so it is no surprise that applicants with a bad credit history find it difficult to obtain a loan. It is nevertheless, sometimes true that bad things happen to good people, and there are circumstances where a bank or lender may be prepared to lend money either as a personal loan or a mortgage to buy or refinance a house.
The trouble is getting them to listen to you in the first place, and it will generally take a personal approach to get anywhere. I can tell you of many instances where applicants have been too embarrassed to talk about their problems and never ask the question and go on living without the credit they need to buy their own home. Alternatively, they apply online and get an automatic decline result. Online applications are usually doomed because once the credit check indicates a default or a less than perfect history; the decline is triggered without further chance to explain your circumstances.
There are ways around the problem, however, and here they are.
First you have to recognise that this is a specialty area which will require the assistance of a specially trained professional. Happily their services are usually free (if they are not, then I would advise you to try someone else, but I will cover this in a later article). These professional finance brokers will stand apart from most mortgage brokers by offering a specialised service geared specifically around what are known as non conforming loan products. Although most brokers will have a general knowledge, every case is different, and you really need the services of these specialty brokers.
They will not only give you the correct information but will also provide other helpful information about resources you can access to improve your chances of successfully applying for a loan.
Be warned, brokers that advertise easy to obtain finance may only be looking for a chance to earn a quick buck from you and then leave you in the lurch. Specialty brokers will investigate your individual case and advise on the best approach, often backed up by a direct approach to a lender on your behalf to establish a likelihood of success.
It is a little known fact that non conforming lenders offer the best commission for brokers, sometimes at nearly three times the rate of other traditional lenders. That is why they are so keen to “help” you. You will generally know when you speak to a broker exactly how good they are by asking them some questions as follows. Are you a specialist in non conforming loans? How long have you been dealing with bad credit applications? What special services do you offer people with bad credit problems? Can you get me a cheap rate? (The answer to this one should be “no”, but rates vary from lender to lender).
This should be enough to give you an idea as to their motivation.
After this, be prepared to tell your broker everything. This is the vital step because it will determine exactly whether you can get a loan or not. A good broker will take his or her time and go through everything, and may ask some strange sounding questions. Just be as honest as you can and be prepared to provide a lot of documentation if asked for it. The more you can come up with the better for you.
Finally, refinancing for bad credit may place you in a better situation than you ever realised. With good advice and a plan to move forward, you will soon be sleeping soundly at night, with peace of mind that comes with the right financing package.