Adding Cash To Your Offer May Get You A Loan Approval

By Michele Lerner
Mortgage Credit Problems Columnist

The best way to find out if you can qualify for a mortgage is to reach out to bad credit mortgage lenders by entering your information on this page. Compare your offers and then take some steps to make your qualifications stronger.

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Bad Credit Loans and Gift Funds

Bad credit mortgage lenders are willing to work with people who have credit problems, but they also want to qualify people who are likely to repay their loans. Naturally, these bad credit mortgage lenders will charge a higher interest rate for borrowers with poor credit, since the lender is taking on extra risk by approving their loan.

Making yourself more attractive to a bad credit mortgage lender may result in a slightly lower interest rate or at least improve the possibility of a mortgage loan approval. While you may not be able to instantly boost your credit score, you can offer a larger down payment with the help of gift funds from family members. Your relatives will need to provide a letter stating that the funds are a gift that will not need to be repaid and they will need to transfer the funds to you before the closing.

A gift for down payment and closing costs can be used either in addition to your cash or you can use it instead of your money. That way, you can keep your own cash to pay down debt and improve your debt-to-income ratio or hold onto the money in a savings account. Lenders want to see that borrowers have some cash reserves on hand for an emergency savings fund.

Lenders and loan programs, whether they are for good credit borrowers or for those who need a mortgage for bad credit, vary in their rules about how much money can be contributed for a down payment or closing costs by the home seller and from family members for gifts. Sellers are allowed to contribute up to 3% of the sales price for closing costs. Some down payment and closing cost programs are available for qualifying home buyers from state housing agencies.

Enter your information on this page to find out where you stand with bad credit mortgage lenders and then start investigating ways you can boost your cash contributions to a home purchase.



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