People with credit issues, mature applicants, and those who are self-employed will find getting approval for a mortgage difficult. The main contributing factor is increased risk for the lender. Some lenders will approve mortgages under specific conditions.
A mortgage for people with poor credit may require a larger down payment than what is standard. They may have to pay a higher interest rate to offset the risks, or find a cosigner. Mature applicants may only be approved for a short-term mortgage, such as ten years instead of twenty or thirty years. The life expectancy is higher due to medical advances, but the bank does not see it that way.
Self-employed individuals are a higher risk to lenders because business is not guaranteed. That means income can diminish without warning. A consulting engineer, for example, may have a high income one month, and no income the next. Demonstrating steady income for the past five years may be required before a mortgage will be approved.
Many lenders will simply deny the mortgage application and avoid high risk. That does not mean people will have to settle for renting all their lives. There are lenders and brokers who specialize in accommodating applicants with extenuating circumstances.
Brokers will search all possible lenders to find a mortgage that will be right for most applicants. Lenders with programs or plans for helping people rebuild their credit will work with applicants to get a mortgage approved. Higher interest rates are to be expected to offset the increased risk. One denial does not necessarily translate into a string of denials.
Finding a Broker
Selecting the right broker can make the difference between home ownership and renewing a rental agreement. Ask how many lenders they have access to when searching for a mortgage. Experienced firms will have access to over two-thousand lenders.
Discover how the broker gets paid. Most are paid a commission by the lender once the mortgage is signed. Some will charge the client a nominal fee for services in case no mortgage can be arranged. That amount varies, but will not exceed one percent of the total amount requested for the mortgage.
Research some firms for comparison purposes. Websites often include a contact information page that can be submitted right online. A broker will then call or email to discuss possibilities. People can visit our website to begin the process.