If you are planning to get a home loan to buy a house before the Christmas season, you definitely can. Typically a home loan takes about 4-6 weeks from the time you have submitted your application considering that all requirements are complete and that you have met all the eligibility requirements. Just in time for the holidays.
The processing of home loans really depends on how fast you meet all requirements and on the state you reside in. Other factors that may affect your application will also depend heavily on your financial standing. To buy a house with bad credit, and having a new home right before Christmas 2018 arrives is possible.
Negative Marks on Your Credit Reports
For those with bad credit history, it could take more time because lending companies usually go through a thorough process of gauging the complexity of your situation. Normally, those who have negative marks on their credit reports will have a challenging time acquiring a home loan with good terms and conditions.
Fixing a bad credit rating doesn’t happen overnight. These negative marks usually stay in your credit file for at least 7 years or until you do something to improve it. Regardless, you can still get a home loan but expect to have a higher interest rate.
What to do if you want to buy a house with bad credit?
1. Review Your Credit History
Figure out what’s hurting your credit. Before you even apply for a mortgage, you will want to take a look at your credit report no matter where you stand in your credit. You can get free copies of your credit report every 12 months from any of the credit bureaus.
This provides you with a good kick off point. When you are able to determine what credit issues are affecting your credit, you know where to start fixing the problem. You also would want to find errors on your credit. Small errors bring down your scores and so it is best to check these errors too. You can dispute credit report errors. It usually takes 30 to 45 days for credit bureaus to respond to credit disputes.
You might also want to consider paying in cash for your Christmas gifts instead of using credit. Or you might want to explore the possibilities if giving away personalized gifts this year. You’ll be able to save a few hundred or even thousands of dollars that you can save for your first mortgage payment.
2. Improve Your Credit By Taking Action Now
If you possibly could postpone trying to get a mortgage right up until you have done something to increase your scores, it could eventually save your time and money. Here are a few things you can do to improve your credit:
- Make payments on time. It is essential to let your lenders know that despite the black marks on your credit report, you are still a good and prompt client. Seeing that all your utility bills and loans being paid on time is a good impression you would want to leave with your creditors.
- Limit the number of inquiries to your credit. Inquiries on your credit and the result of such inquiries are also included in your credit report. The more inquiries and failed applications that you have, the least chances of securing a loan or a better deal for your approved loan. Take your time in applying and if you are rejected, find time to improve your finances before attempting to apply for a loan again.
- Pay off your debts to strengthen the credit utilization ratio. The least debts you have, the more extra money you have to afford a loan repayment. It would also be ideal to reduce your debt to be able to increase your borrowing power and add more funds to your savings or to buy gifts for Christmas.
3. Start Saving Where You Can
While you are focusing on improving your credit score, it’s a smart decision to start saving money. The more your savings be for a down payment, the better. A larger down payment is more appealing to lenders. This can also mean less interest and lower monthly payments. Keep in mind, bankruptcies along with other major credit problems do not immediately lock the door on home loans. You simply need to think smartly and do your very best to get your credit score moving in the right direction.
4. Consider Getting The Help Of Professionals In The Industry
You can do a lot of things to repair your credit. Nonetheless, if you are having a hard time, you can always seek the help of a professional. Contact a professional credit repair service. They can help you formally file a credit dispute to credit bureaus along with supplying a detailed explanation of the error.
If you have a good credit standing, you can definitely get a home loan approval in three months time, right before Christmas Bells ring a ding. This all depends on your diligence in supplying the required documents. But if you have a bad credit, you will need to start working on improving your credit standing before even you consider taking out a loan. You can also consider getting the help of a credit repair service.