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Bio Statement Green Trust Cash Compensating For Bad Credit On A Mortgage Applicationgreen trust cash payday loans direct lenders only bad credit

Up to 40% of the people who paid a higher rate for a sub-prime mortgage because of bad credit, may have been able to get a better loan, according to a recent survey.

In deciding the fate of your mortgage application, lenders follow underwriting guidelines regarding the allowable number of late payments, and other derogatory credit issues. Depending on the severity of your credit problems, underwriters look for information in your green trust cash installment loans online direct lender file to strengthen and back up their decision to approve your loan.

Here are 4 compensating factors that can offset bad credit in a mortgage application:

Written Explanations - Take the time to write a detailed explanation for each derogatory credit item. A good written explanation for credit problems can be the difference in getting approved or not. Lenders are looking for logical reasons, such as, a medical situation, family emergency, or temporary job loss that caused the late payments.

Job Stability - How long you have been with your current employer, and employed in the same type of work, can strengthen your chance for approval. People that change jobs frequently, especially in different fields of employment, are considered a higher lending risk. Lenders like to see at least two years in the same job, or the same line of work.

Debt Ratio - Your total combined monthly payments cannot exceed a certain percentage of your gross monthly income. Each lender has different guidelines, but the maximum ratio is usually 45 to 50%. If your loan includes cash out to pay off debts, those debt payments are not included in the calculation. A low debt ratio can be a good compensating factor, as opposed to one that pushes the maximum allowed.

green trust cash payday loans direct lenders only bad credit to Value - The amount of equity in your home is expressed as the green trust cash online installment loan direct lender to value, which is determined by dividing the loan amount by the appraised value. Lenders set a maximum loan to value for each mortgage program they offer, and their interest rates are partly based on how much equity you have. Home equity is the best compensating factor, and a lower loan to value can offset more credit problems.

Sub-prime lending has a place in the mortgage industry, but understanding more of the loan process allows you to explore your options and try to get the best mortgage rate.