6 Ways to Get an NJ Real Estate Home Loan with Less Than Perfect Credit
How to improve your chances of obtaining an NJ real estate home loan
To qualify rather easily for an NJ real estate home loan, today’s applicant needs to be considered a "triple threat.” This means you must have an excellent credit rating, a large down payment, and low debt-to-income ratio with steady, sufficient income. However, there is still a possibility for future homeowners with less than perfect credit to one day achieve the American dream. Buyers with unsatisfactory credit due to a foreclosure or bankruptcy, or who have previously been denied for a home loan, can still get a home loan. Sure it is more difficult to do so, but not impossible, and the best thing to do in this situation is to try to present yourself in the best possible light. Below are six factors to consider when submitting your home loan application to help improve your chances for obtaining a mortgage, even with a less than stellar credit rating.
Stress Stable Employment
If you have been working at the same company for several years, be sure to highlight this to offset a bad credit history. Also, state any pay raises or promotions that you have received. If you have a cost-of-living increase every two years or an annual increase in income, be sure to mention in your home loan application that your pay has risen to offset this. Regular bonuses should also be accounted for. Proof of increasing income or additional money will help lenders know that you will have funds to offset any possible rise in expenditures, such as utilities or property taxes.
Increase Your Down Payment
Considering that the days of zero down payment loans are a thing of the past, you can still qualify for a loan with putting 10% down, or 3.5% down with an FHA loan. Typically, the larger the down payment, the quicker the home loan will be approved. The single biggest hurdle to purchasing NJ real estate has always been the ability to come up with enough for the down payment and closing costs. For those who are unable to do so, there are down-payment assistance programs as well as state and local municipality programs to help. You want to demonstrate to the bank that you are not afraid to ask for help and that you have the motivation and responsibility to resolve of your own financial issues.
Point Out Other Assets
If you do not have a significant cash reserve or a large down payment, you want to be able to show the bank the other assets you do have. For example, if you have whole life insurance, list the cash value on your NJ real estate home loan application. If you have a substantial 401(k) or other retirement accounts, mention them all as well as their current values. This strategy lets lenders know that if you are ever having difficulty paying your mortgage, you would be able to rely on one of these other sources to make ends meet.
Stress Your Willingness to Stay in the Home
The goal here is to prove to lenders that you are not a flight risk. NJ real estate home loan lenders want to believe that you are going to stay put in that home for several years. Show that you are committed to the home, neighborhood or community by listing how long you lived at your last or current residence, if the length of time was considerable.
Show Financial Discipline
Prove to lenders that your bad credit is in the past and you have learned from your mistakes by saving money and making better financial decisions. If you have been putting away $500 or more each month to a savings account or have been contributing yearly to a retirement account, this will assist you to obtain an NJ real estate home loan.
Be Realistic About What You Can Afford
You will want to be reasonable about how much house and mortgage you are really able to afford, regardless of what others tell you. The best advice is to start out smaller than you want. In addition, do some research to learn the average home prices in the area in which you want to purchase. This is the sensible thing to do is to own a home you can actually afford than to move into something outside your monthly payment comfort level and stand the risk of further ruining your credit rating in the future.
The real estate market is changing rapidly and expanding into new avenues almost daily. Sometimes it can be very difficult to find the answers you need on a specific topic or issue. In times like these, you need a real estate professional who will provide valuable information and trustworthy advice. For more information on NJ real estate, call us today or click here to be connected with one of our top real estate specialists.
